Chennai: Despite the initial concerns about the impact on the MSME sector, the European Union’s carbon border tax will help export-centric sectors achieve net zero much ahead of the government deadline.
The European Union intends to bring down carbon emissions in a phased manner in order to become a net-zero emitter of greenhouse gases by 2050, ahead of 2070 when India intends to be net zero.
The Carbon Border Adjustment Mechanism (CBAM) or Carbon Border Tax is set to be implemented from October 1, 2023. In the first phase, the EU will monitor the emission levels of goods entering the market from different source countries and by 2026 the tax will be levied on goods.
“Different sectors have different emission targets. Sectors like steel, engineering and plastics are high on the radar. The industry has accepted that they have to bring down the emission levels to become competitive in markets like the EU. However, the industry has to be further sensitised on the need to become low emitters. This is good for the country as these industries will become net zero much ahead of 2070,” said Ajay Sahai, director general, and CEO of the Federation of Indian Export Organisations (FIEO).
According to him, the government is looking into ways of lowering emissions not just for the exporters, but for those focusing on the domestic market as well. “Large companies realise the importance of the carbon border tax and they are in the process. Government will have to pitch in for the small and medium companies,” he said.
"There are various options which are currently being examined. So, this is one of the top agenda items of the Department of Commerce,” said Santosh Kumar Sarangi, Director General, Directorate General of Foreign Trade (DGFT) in a recent meeting.
“How do we create a mechanism which will support MSMEs, our steel industry, our aluminium industry is something on which the Department of Commerce, Ministry of Steel and Ministry of MSME all are trying to work together," he said.
