Union Commerce Minister Piyush Goyal on Tuesday said India is considering a suggestion from the European Union (EU) for New Delhi to develop its own mechanism instead of paying higher taxes to the bloc under the Carbon Border Adjustment Mechanism (CBAM).
“EU has suggested that instead of paying CBAM taxes to them, India could device its own mechanism. We will consider their suggestion and develop a solution beneficial for the Indian economy,” the minister said.
He said that India is in talks with the EU on CBAM, adding that the carbon tax would hurt the bloc’s economy “very badly” and could lead to “further distress”.
It is to be noted that the EU introduced CBAM on October 1, 2023. This duty will translate into a 20-35 per cent tax on select imports starting January 1, 2026.
The aim is to reach net-zero greenhouse emissions by 2050. India is also said to be considering a carbon tax, especially for exports to European nations.
The minister also said that the Indian government is not rethinking its stance on foreign direct investment (FDI) from China, indicating that the country may continue to exercise increased scrutiny on investments from Beijing.
“It (Economic Survey) is the Chief Economic Adviser’s report, it is a report that always gives out new ideas. It is not binding on the government. And there is no rethinking on supporting FDI from China,” Goyal said.
The survey points out India’s ballooning trade gap with China and prescribes a shift to capital from the neighbouring nation to lower this import dependency.
Chief Economic Adviser Anantha Nageswaran, in the Economic Survey 2023-24, pitched for more FDI from China. He cited the experience of East Asian economies while advocating for increased FDI from China.
This could boost Indian exports to the US, he added.
“Choosing FDI as a strategy to benefit from the ‘China plus one’ approach appears more advantageous than relying on trade. This is because China is India’s top import partner, and the trade deficit with China has been growing,” Nageswaran added.