EU's Non-Tariff Regulations: Impact on Indian Exporters

The Economic Survey 2024-25 highlights the impact of the European Union's new non-trade measures, including the Carbon Border Adjustment Mechanism (CBAM) and the European Union Deforestation Regulation (EUDR), on Indian exporters. These measures, intended to align with climate change policies, pose significant challenges for exporters from emerging economies.

The European Union's non-trade measures, such as the carbon tax and deforestation regulation, are anticipated to impact Indian exporters, as revealed in the Economic Survey 2024-25 released on Friday.

These non-tariff measures are increasingly being adopted worldwide to support industrial policy goals. Unlike broad tariffs, they are more specific and often less visible, making them challenging to evaluate.

The EU's future impositions of climate-change-related measures, through the Carbon Border Adjustment Mechanism (CBAM) and European Union Deforestation Regulation (EUDR), are expected to have profound effects on exporters from emerging markets like China, India, and Turkey.

The CBAM, also under consideration by the UK, aims to equate the carbon emissions cost of imported goods with domestically produced ones. Importers will need to purchase carbon certificates akin to those paid by domestic producers under EU carbon pricing rules.

Sectors such as iron and steel, aluminium, cement, and fertilisers are included under CBAM, while a proposed ban on steel scrap exports from the EU could significantly hamper developing countries' abilities to produce more carbon-friendly steel.

The EUDR, set to be implemented by the end of 2025, seeks to control the consumption of products originating from deforested areas.

(With inputs from agencies.)