India is increasing financial support for exporters dealing with the European Union’s Carbon Border Adjustment Mechanism (CBAM), with Commerce and Industry Minister Piyush Goyal announcing plans to cover the full expense of international certification for micro and small enterprises. The package also includes tiered assistance for larger firms and work aimed at strengthening domestic verification capabilities. Goyal made the remarks during a visit to Berlin on 23 October.
Speaking in Berlin, Goyal said the government is prepared to finance certification costs for smaller exporters through its Export Promotion Mission. The government is also reviewing options to build verification capacity in India, with the stated goal of reducing spending on emissions documentation and compliance work tied to European environmental requirements. The measures focus on administrative and technical burdens faced by Indian manufacturers supplying the EU.
Export Promotion Mission and TRACE reimbursement rules
The CBAM-related support is built on the Export Promotion Mission, approved in November 2025 with funding of about €2.36 billion over six financial years. The programme combines export financing, market-access support, international certification backing, and measures intended to improve business competitiveness. A central element is TRACE, introduced in February 2026 and expanded substantially in July.
Revised rules issued by India’s Directorate General of Foreign Trade on 1 July 2026 set reimbursement rates for eligible firms. Micro and small enterprises can receive reimbursement of up to 95% of qualifying certification and compliance expenditure, while medium-sized businesses can receive up to 80%. The standard annual reimbursement ceiling is equivalent to approximately €47,000 per exporter identification code per financial year.
The revised rates replaced earlier February 2026 reimbursement levels of 60–75%. Eligible spending includes testing, inspection, certification, and conformity-assessment services. Payments are split into two instalments, with the second instalment linked to exports associated with the relevant certification.
Goyal’s latest commitment to finance 100% of certification costs for smaller exporters would exceed the existing 95% reimbursement ceiling. However, revised implementing rules confirming an automatic entitlement to full reimbursement have not been established. As a result, the announcement is described as a policy commitment rather than a confirmed change to the existing framework.
Which CBAM verification services qualify for support will depend on applicable eligibility lists and programme conditions. Eligibility will therefore vary by service type under the programme rules. Exporters are expected to meet documentation requirements aligned with European expectations for covered goods.
CBAM scope for steel and aluminium imports
The EU’s CBAM entered its definitive phase on 1 January 2026, covering specified imports of iron and steel, aluminium, cement, fertilisers, electricity, and hydrogen. The mechanism is intended to align carbon costs for covered imports with costs faced by European producers under the EU Emissions Trading System (EU ETS). Indian exporters supplying these categories must provide emissions data and documentation that meets EU requirements.
For Indian steelmakers, exposure depends on production technology, fuel consumption, emissions intensity, and availability of independently verified installation-level data. Integrated plants using coal-intensive blast-furnace production generally face greater carbon exposure than less emissions-intensive facilities. Actual liabilities also depend on product methodology, benchmarks, and verified emissions.
Aluminium producers face different considerations tied to electricity prices and emissions intensity of production. Under current CBAM calculations for aluminium, specified emissions categories are covered rather than automatically pricing every indirect emission associated with electricity consumption. This distinction affects how producers evaluate renewable electricity contracts and investments in cleaner power supplies.
Fastmarkets modelling published in October 2026 estimated an indicative CBAM cost of €277.60 per tonne for Indian hot-rolled coil produced via the blast-furnace/basic-oxygen-furnace route using default values and third-quarter carbon pricing. For one category of unwrought, unalloyed aluminium, a corresponding Indian default-value scenario was estimated at about €55.12 per tonne. These figures are described as indicative rather than universal charges.
The estimates can differ from actual liabilities when verified installation emissions replace default values or when other calculation adjustments apply. Even where emissions documentation is fully subsidised through certification support, carbon-related costs borne by European importers may still be passed back through commercial contracts. Certification assistance therefore covers only part of exporters’ overall exposure under CBAM arrangements.
Domestic preparation versus EU-accredited verification
India’s plan to develop domestic verification capacity is intended to reduce reliance on external technical advisers and overseas inspection services. Engineering companies, testing laboratories, and emissions specialists could take on roles such as collecting production data, establishing monitoring procedures, reviewing emissions calculations, and preparing industrial facilities for independent verification. The approach distinguishes between technical preparation work and statutory verification requirements.
Under the European Commission’s CBAM accreditation framework, mandatory verification must be performed by verifiers accredited through relevant EU national accreditation bodies. Firms outside Europe may seek accreditation through those routes, but approval from Indian authorities alone does not satisfy EU requirements. Verification reports must also follow prescribed European procedures and Registry requirements.
This means domestic organisations can provide technical preparation and pre-verification services while statutory CBAM verification remains subject to applicable European accreditation rules. Connecting technical preparation with statutory verification is expected to matter for manufacturers seeking to rely on actual emissions data instead of default values that may be less favourable. Local certification or technical approval cannot replace mandatory EU-accredited verification.
CBAM alongside India-EU free trade negotiations
The compliance initiative aligns with developments in bilateral trade relations between India and the EU. The EU and India concluded negotiations on a free trade agreement in January 2026, while the European Commission submitted proposals for signature and conclusion in September; the agreement has not yet entered into force. Bilateral merchandise trade reached approximately €118 billion in 2025.
The proposed trade agreement and CBAM address different regulatory areas under separate frameworks. A free trade agreement changes market-access conditions and tariffs, while CBAM imposes carbon-related obligations on specified imported goods under EU legislation. Indian exporters could benefit from improved tariff treatment while continuing to face emissions reporting, verification processes, and certificate-related commercial exposure tied to EU rules.
Suppliers may still face commercial impacts from high default emissions values or insufficient verification evidence used in CBAM calculations by European buyers. Carbon-cost adjustments imposed by those buyers can also affect contract terms even when tariff conditions improve through trade arrangements. For manufacturers operating on narrow margins, additional compliance costs could influence how much benefit is retained from improved customs access.
Implementation considerations for reimbursement timing
The support framework is designed to reduce compliance costs for smaller exporters by lowering expenses related to establishing emissions-accounting systems and certification arrangements. Such businesses often lack dedicated teams for monitoring emissions across production processes as well as energy inputs and material supply chains. Subsidised compliance preparation is intended to support consistent emissions records used in independently verified information requests from buyers.
Larger industrial groups may also benefit if domestic technical-services capacity expands enough to reduce verification-related expenditure paid outside India. The programme’s practical impact depends on implementation details including guidance on eligible services, documentation standards, reimbursement conditions, and cooperation between Indian service providers and EU-accredited verifiers. Payment timing is another factor because exporters may need to finance certification expenditure before reimbursement arrives.
This creates a distinction between reimbursable compliance costs under the programme terms and potentially larger financing needs linked to carbon liabilities, industrial investment requirements, or contractual price adjustments tied to CBAM outcomes. Government support focused on emissions verification does not itself provide capital required for modernising production equipment or reducing fossil-fuel consumption or securing cleaner energy supplies.
Industrial decarbonisation links to export competitiveness
The initiative could reduce administrative costs associated with meeting European requirements compared with competing export origins including Turkey and China. Longer-term commercial effects are described as depending on whether compliance assistance coincides with measurable reductions in industrial emissions levels over time. For steelmakers mentioned under the measures’ scope areas include energy efficiency upgrades, lower-emission production technologies, material recovery efforts, and alternative production routes.
For aluminium manufacturers referenced within the same framework areas include process improvements alongside energy procurement decisions that affect competitiveness under current CBAM treatment of electricity-related emissions categories. European importers continue assessing suppliers based on production costs, delivered prices, verified emissions information, contractual reliability factors, and exposure to carbon-adjustment liabilities linked to CBAM outcomes.
The government’s stated aim within this initiative is improving exporters’ position by reducing expenses required to prepare documentation needed for meeting European requirements under CBAM rules. The approach described distinguishes between subsidising certification costs—which lowers administrative expenditure—and reducing industrial carbon intensity—which affects exposure under the EU mechanism through underlying emissions profiles used in calculations.