EU's Carbon Tax to Minimally Affect Indian Aluminium Exports: ICRA

11 Apr 2024 CW Team

CBAM, adopted by the EU in May 2023 to combat climate change, will levy taxes on imports from six sectors, including aluminium. However, the regulation focusing solely on direct emissions from the production process, starting January 1, 2026, is expected to minimize its effect on Indian exports to the EU, excluding indirect emissions that constitute a significant portion of total emissions from primary aluminium production.

Jayanta Roy, Senior Vice-President and Group Head, Corporate Sector Ratings, ICRA, highlighted that India exported around 0.7 million metric tonnes (24% of total export) of primary aluminium to European countries in FY2023. Roy projected taxes from CBAM to range from US$ 50-140 per metric ton between calendar years 2026 to 2034, representing approximately 2-6% of current aluminium prices. However, he cautioned that including indirect emissions in the future could significantly impact prices, given India's reliance on coal-fired power plants.

Despite the transition from the EU Emission Trading System (EU-ETS) to CBAM over eight years, Roy noted the limited financial impact, thanks to the minor share of direct emissions in total emissions. However, he emphasized India's commitment to reducing carbon footprint, aiming for net zero status by 2050. Roy highlighted the domestic aluminium sector's higher carbon intensity compared to the global average and advocated for transitioning to low-carbon technologies and renewable power.

Roy concluded that while transitioning might require significant capital investments, entities could opt for power purchase agreements as a cost-effective strategy to secure renewable energy.

As the EU takes steps to combat climate change, the impact of CBAM on global trade dynamics, particularly in carbon-intensive industries like aluminium, remains a subject of close scrutiny.

The implementation of the Carbon Border Adjustment Mechanism (CBAM) by the European Union, aimed at taxing carbon emissions in imports, is anticipated to have a limited impact on India's primary aluminium producers, as per a report by credit rating agency ICRA. CBAM, adopted by the EU in May 2023 to combat climate change, will levy taxes on imports from six sectors, including aluminium. However, the regulation focusing solely on direct emissions from the production process, starting January 1, 2026, is expected to minimize its effect on Indian exports to the EU, excluding indirect emissions that constitute a significant portion of total emissions from primary aluminium production. Jayanta Roy, Senior Vice-President and Group Head, Corporate Sector Ratings, ICRA, highlighted that India exported around 0.7 million metric tonnes (24% of total export) of primary aluminium to European countries in FY2023. Roy projected taxes from CBAM to range from US$ 50-140 per metric ton between calendar years 2026 to 2034, representing approximately 2-6% of current aluminium prices. However, he cautioned that including indirect emissions in the future could significantly impact prices, given India's reliance on coal-fired power plants. Despite the transition from the EU Emission Trading System (EU-ETS) to CBAM over eight years, Roy noted the limited financial impact, thanks to the minor share of direct emissions in total emissions. However, he emphasized India's commitment to reducing carbon footprint, aiming for net zero status by 2050. Roy highlighted the domestic aluminium sector's higher carbon intensity compared to the global average and advocated for transitioning to low-carbon technologies and renewable power. Roy concluded that while transitioning might require significant capital investments, entities could opt for power purchase agreements as a cost-effective strategy to secure renewable energy. As the EU takes steps to combat climate change, the impact of CBAM on global trade dynamics, particularly in carbon-intensive industries like aluminium, remains a subject of close scrutiny.

Infrastructure Transport

06 May 2026

Pune To Build Nine Km Link Road Between Highways

The Pune Municipal Corporation (PMC) has decided to appoint an expert to plan the development of a nine km long, 60 metre wide road from Khadi Machine chowk to Wadki chowk as an extension to the Katraj-Kondhwa road to link the Mumbai-Satara and Pune-Solapur national highways. The scheme is intended to divert heavy vehicle traffic away from the city and improve access between the two arterial routes. The project has been prioritised by the PMC and forms part of a larger set of schemes in which 19 roads have been identified for development at a combined cost of Rs 9.82 billion (bn) to address c..

Infrastructure Transport

06 May 2026

Barabanki Bahraich Six Lane Highway Approved in Uttar Pradesh

The Uttar Pradesh government has approved construction of a new six-lane highway linking Barabanki and Bahraich as part of National Highway 927, and the cabinet has cleared the project. The alignment will pass through Mustafabad and Kaiserganj and extend for about 101.5 km, creating a key corridor for local and long-distance movement. The National Highways Authority of India will oversee the work and has signalled the scheme is intended to strengthen regional connectivity and cross-border access to Nepal. The project carries an estimated total cost of Rs 69,690 million, equivalent to Rs 69.69..

Infrastructure Transport

06 May 2026

Toll At Kharegaon Likely As Highway Upgrade Nears Completion

A section of the highway at Kharegaon has undergone an upgrade and is approaching completion, and authorities have indicated plans for a toll to be introduced once works finish. The project has focused on strengthening the carriageway, improving drainage and upgrading intersections to enhance safety and capacity. Officials have said the toll will be used to recover construction costs and fund ongoing maintenance. The upgrade included resurfacing of the pavement, widening of certain stretches and installation of modern signage and lighting to reduce accident risk. Contractors completed most ma..