The EU’s Carbon Border Adjustment Mechanism (CBAM) is poised to reshape the future of international trade, and Indian exporters cannot afford to ignore the signals. When the regulations were first announced, they sparked a wave of uncertainty across industries.  

Recognising this, we at KarbonWise partnered with the Indo-German Chamber of Commerce (IGCC) to deliver a focused workshop, simplifying CBAM compliance for Indian exporters. The experience was mutually enriching. While we equipped businesses with tools to prepare, we also gained first-hand insight into their evolving priorities, particularly how they plan to remain competitive in a decarbonising global market.  

What is the EU’s Carbon Border Adjustment Mechanism (CBAM)?

The Carbon Border Adjustment Mechanism (CBAM) is a policy introduced by the European Union to place a carbon price on imports of certain goods, ensuring that foreign producers are held to the same climate standards as EU companies.

Exporters are required to report both Scope 1 (direct) and Scope 2 (indirect) emissions using GHG Protocol-aligned methods. This isn’t just a compliance issue, it’s a data infrastructure challenge. Most Indian businesses currently lack the tools for accurate emissions tracking, making immediate investment and strategic planning critical.

Key takeaway from our CBAM workshop:

• Participants gained clarity on the level of technical detail required for CBAM reporting, including the need for accurate primary emissions data from production processes.
• Exporters learned how to align their Scope 1 and Scope 2 calculations with internationally accepted GHG accounting standards in order to meet EU disclosure expectations.
• The session highlighted that CBAM compliance is as much a data and systems challenge as it is a regulatory one, making early preparation essential for Indian manufacturers.

To explore more insights from the session, you can access the full workshop recap on our events page.

CBAM Impact on Indian Industry

The price surge of carbon is no longer just a concept, it’s starting to show up on the balance sheets. Among all sectors, iron and steel are by far the most exposed, making up nearly 90% of India’s exports covered under the EU carbon tax mechanism, CBAM.

Understanding how CBAM affects Indian steel and aluminium exporters is crucial, especially as steel exports could face added costs ranging from $60 to $165 per metric tonne by 2034, according to Wood Mackenzie and ICRA.

Aluminium isn’t far behind, and it could get hit even harder. While current CBAM regulations cover direct emissions, future phases may include indirect emissions, such as those from coal-based electricity, which powers much of India's aluminium production. If that happens, aluminium exports could see a cost increase of 30–33%, severely impacting price competitiveness in the EU market.

Emerging Sectors at Risk

If CBAM expands its scope, as many expect it will, the next sectors likely to come under the scanner include organic chemicals, plastics, polymers, and hydrogen. Over time, it’s not far-fetched to imagine the mechanism gradually covering almost all carbon-intensive industries, broadening its impact across a much larger slice of India’s export portfolio.

CBAM Reporting for Indian Exporters

Navigating CBAM isn’t just a reporting exercise, it’s a transformation of how exporters manage carbon across operations. For Indian businesses aiming to stay competitive in EU markets, understanding CBAM reporting requirements for Indian suppliers is essential.

Here’s a Pragmatic Three-Step Roadmap:

1. Quantify Emissions with Precision

Start with facility-level audits guided by the GHG Protocol. For steel manufacturers, this means capturing emissions from blast furnaces. For aluminium producers, emissions tied to electrolysis and anode consumption must be tracked. Precision matters, both for regulatory compliance and long-term carbon strategy.

2. Modernise Monitoring and Reporting

Manual processes won’t scale. Deploy IoT sensors and integrate emissions tracking into ERP systems to enable real-time data flow. KarbonWise offers purpose-built templates that align with the EU’s Quarterly CBAM Report format, decreasing reporting friction and increasing accuracy.

3. Decarbonise with Intention

‍Compliance alone isn’t enough. Shifting to renewables, particularly solar, can reduce aluminium-related emissions by 20 - 40%. Exporters should also tap into national programmes like the Perform, Achieve, and Trade (PAT) scheme, which offers incentives for industrial energy efficiency upgrades.

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Certification and Verification

CBAM needs proof. It’s not enough to just calculate emissions, you have to back it up with third-party verification. The EU is keen on credibility and transparency.  

The emissions data must be verified by EU-accredited or EU-recognized verifiers. These are independent bodies that ensure the numbers reported comply with EU standards. If your emissions reporting meets these standards, you’re effectively certified.  

Without this certification, your emissions data won’t be accepted, and your EU buyers may face higher carbon costs or even rethink sourcing.  

Currently, Indian companies may need to collaborate with international verification agencies (like TÜV, SGS, or DNV) until Indian bodies are formally recognized by the EU.

How to Calculate CBAM Liabilities

Importers to the EU have to pay for the carbon emissions linked to the products they bring in.

Carbon Pricing Methodology

It’s an ultimatum.

Carbon Pricing Methodology assigns a cost to carbon emissions, based on how much is released and the price per tonne. Often, organisations emit greenhouse gases, but the consequences fall on all of humanity. Carbon pricing introduces accountability by shifting the cost of climate change from society to the very producers responsible for the emissions. It gives producers a choice: reduce their emissions to avoid high costs, or keep polluting and pay the price for the environmental harm they cause.

Carbon prices vary by region due to local policies and regulations. They are adjusted to reflect the specific pricing mechanisms in each location where emissions occur. This ensures accurate and fair carbon valuation across operations.

Compliance Strategies for Indian Exporters

To stay competitive in the global market, Indian exporters must prepare strategic responses to the EU Carbon Border Adjustment Mechanism (CBAM) and anticipate future carbon-related regulations.

Reducing Product Carbon Footprint comes as the most obvious step in dealing with CBAM. For reduction to happen, a clear picture of the carbon footprint should be well understood. Emissions across various scopes should be mapped. Scope 3 in particular must be followed through suppliers and other third parties. Followed by quantification of the emissions data via a platform like KarbonWise.  

Beyond measurement, establishing clear climate goals is essential. Targets such as achieving ​​net zero, carbon neutrality, or climate neutrality should be established to guide reduction efforts. These goals drive the adoption of cleaner technologies, process improvements, renewable energy sourcing, and sustainable supply chain practices. Only with robust data and clear targets can effective reduction strategies be implemented.

Aligning with EU Standards, Indian companies must also prepare for stricter reporting requirements under evolving frameworks such as the Corporate Sustainability Reporting Directive (CSRD), and complement these efforts with third-party verification and certification, ideally through EU-accredited bodies.

Leveraging Green Finance is crucial. Green finance is money that’s used to support the environment, like for a solar panel and an electric transport system. It’s the financial world trying to help fix environmental problems, like climate change, pollution, or energy waste.  

A Few Examples:

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Green finance offers companies a strategic way to secure funding for environmentally responsible initiatives, often at more favourable terms. It helps businesses stay aligned with evolving investor demands and regulatory standards, while also improving their public image. Beyond the financial benefits, it supports innovation and reduces long-term risks. In essence, it allows companies to achieve both financial and environmental goals together.

Wondering where you stand with CBAM? This simple checklist will point you in the right direction.

Bridging the GHG Protocol and CBAM: A Practical Compliance Roadmap for Exporters

While the EU’s CBAM and the GHG Protocol may appear to serve different purposes, aligning them is key to building a robust, future-ready emissions strategy. Both frameworks require rigorous emissions tracking, but with different lenses.

CBAM zeroes in on product-level emissions, essential for tariff calculations, whereas the GHG Protocol is oriented around organisation-wide carbon footprints.

This divergence creates a critical compliance gap. Although CBAM currently excludes Scope 3 emissions, many EU buyers now treat full-scope reporting – including supply chain emissions as a baseline expectation in supplier assessments. Exporters who focus only on meeting the bare minimum compliance requirements risk being excluded from long-term, strategic business opportunities with global buyers.

Conclusion  

Compliance goes beyond intent, it requires strong infrastructure. Many Indian exporters still lack reliable systems for measuring even direct emissions (Scope 1), let alone indirect (Scope 2) or value-chain emissions (Scope 3). While Scope 3 is not yet covered under CBAM, all indicators suggest it’s only a matter of time. This adds a layer of strategic complexity that businesses must start addressing now – not later. The growing pressure from EU carbon tariffs that Indian exporters face underscores the urgency of building robust emissions tracking and reporting capabilities.

CBAM isn’t a temporary hurdle, it’s the beginning of a new trade reality.  

As CBAM reporting requirements become more stringent, exporters who act early will not only avoid penalties but also position themselves as preferred suppliers in a carbon-conscious Europe.

Partnering with experienced sustainability platforms like KarbonWise can streamline this transition, offering tailored solutions for emissions tracking, reporting, and strategic decarbonisation. In a rapidly changing trade environment, having the right partner isn’t optional – it’s essential.  

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