India-EU Trade Pact Includes Protections Against EU Carbon Taxes

Additional Secretary in the Department of Commerce Darpan Jain announced that the India-EU Free Trade Agreement (FTA) contains a dedicated annexure and work plan to address the European Union's Carbon Border Adjustment Mechanism (CBAM). Speaking at the Indo-German Chamber of Commerce Industry Dialogue 2026, Jain detailed provisions designed to assist small and medium enterprises with carbon verification and a mechanism allowing businesses to offset carbon prices paid in India against those in Europe.

The agreement ensures that India will receive any future flexibility the EU extends to other countries. To ensure businesses can utilize the pact, the Department of Commerce intends to launch a nationwide outreach campaign across all districts.

Negotiations for the FTA concluded in January. Signing is expected later in 2026, with implementation likely to follow in 2027.