India is seeking a clearer pathway for its domestic carbon-pricing system to be considered under the European Union’s Carbon Border Adjustment Mechanism (CBAM). Discussions between Indian officials and the European Commission have addressed emissions monitoring, verification and how carbon costs on traded goods are treated.
On 12 October 2026, India’s Power Secretary Pankaj Agarwal met Gerassimos Thomas, the European Commission’s director-general for taxation and customs, in New Delhi. The meeting covered India’s developing carbon market, EU CBAM implementation, and monitoring, reporting and verification (MRV) systems. It also addressed the potential recognition of domestic carbon-pricing mechanisms.
No formal agreement recognising India’s carbon-pricing system under EU CBAM was reported to have emerged from the meeting. As a result, Indian exporters cannot assume that carbon costs incurred under domestic arrangements will automatically qualify for deductions from their European CBAM liabilities.
Carbon Credit Trading Scheme coverage and power capacity
India reported that emissions-intensity reduction targets under its Carbon Credit Trading Scheme (CCTS) cover 490 industrial units. The country also highlighted 308 GW of non-fossil power capacity within total installed electricity generation capacity of 558 GW.
The technical dialogue was described as a channel for examining how India’s developing carbon market and emissions-monitoring infrastructure could relate to EU CBAM requirements. For exporters, commercial relevance depends on whether domestic carbon-pricing arrangements can be supported by evidence acceptable under the European framework.
A national carbon market alone was not presented as sufficient to establish eligibility for CBAM relief. Exporters are expected to demonstrate that a qualifying carbon price was effectively paid on emissions embedded in goods entering the EU.
Evidence requirements for carbon-price deductions
Whether domestic carbon costs qualify for recognition depends on evidence covering the payment made and the emissions to which it applies. The information also needs to address the treatment of free allocation and any rebates or other forms of compensation.
The relationship between the carbon price and the specific exported product is also relevant to any potential deduction. These requirements place emissions data and verification arrangements at the centre of any relief mechanism.
To support claims, Indian producers would need to link domestic carbon costs to installation-level emissions and to the products supplied to European customers. For EU importers, outcomes could influence supplier comparisons based on whether documented domestic payments qualify after CBAM adjustments.
Implications for steel, aluminium and MRV documentation
India’s discussions were described as particularly relevant to steel and aluminium, sectors where India is a major exporter to international markets. The potential expansion of EU CBAM to additional downstream products from 2028 was also raised, subject to adoption of relevant legislation.
For producers supplying these markets, interactions between domestic carbon pricing, emissions verification and EU import requirements could affect export costs. Any benefit would depend on final regulatory treatment and on the ability to substantiate eligible payments against emissions associated with exported goods.
The talks were also framed as part of broader efforts by third countries to connect domestic climate policies with carbon-border measures. Practical value depends on whether relevant carbon costs and emissions records can be demonstrated under the rules of the importing jurisdiction.
Regional reference point from UK CBAM framework
Serbia and Montenegro were cited as providing a regional comparison through the United Kingdom’s CBAM framework. The UK lists both jurisdictions as having carbon-pricing systems that may qualify for relief, subject to applicable evidence and eligibility requirements.
The UK arrangements were noted as not determining how the EU will treat India’s carbon-pricing system. The two jurisdictions operate under separate legal frameworks, so recognition under one does not establish entitlement to relief under the other.
For Indian exporters, the key issue remains whether India’s Carbon Credit Trading Scheme, MRV arrangements and verification infrastructure can provide sufficiently precise evidence of the effective carbon cost associated with a tonne of steel or aluminium entering the European market.