India has sent a strong message to the UK over its planned carbon tax. Union Minister Piyush Goyal made it clear: if London goes ahead with the Carbon Border Adjustment Mechanism (CBAM), India will strike back with equal force.
This warning came just two days after India and the UK signed a major trade deal on July 24. The deal, called the Comprehensive Economic and Trade Agreement (CETA), doesn’t include any rule on CBAM. But the UK has agreed in private talks that India can take action if CBAM hits Indian exports.
What is the UK’s CBAM Plan?
CBAM is a kind of carbon tax. It puts a price on goods coming into the UK based on how much carbon they emit. The UK says it will start this policy in 2027. The tax will apply more if the exporting country has weak carbon rules.
This is supposed to help cut global emissions. But in real terms, it could act like a new non-tariff barrier—one that makes Indian exports like steel and iron more expensive in the UK market.
India Says “No More Weak Responses”
Piyush Goyal didn’t hold back. Speaking on July 26, he said India is not weak and will “respond appropriately” to any unfair policy.
“The EU hasn’t even rolled this out yet. And the UK wants to talk about it already?” Goyal said. “When the time comes, India will not stay quiet.”
He also said that CBAM is causing more worry in Europe than in India. EU exporters may end up losing more because their goods will become costly.
EU’s Version of Carbon Tax Also in Play
The EU approved its version of CBAM in 2023. It’s expected to start in January 2026. Their plan includes a carbon tax on steel, cement, aluminium, and other high-carbon products.
India is also discussing a trade deal with the EU. But CBAM has become a roadblock in those talks too.
Steel, Iron Exports at Risk
CBAM could hurt Indian steel and iron exports, which are big in volume. Interestingly, India just secured a full tariff cut on these items in the UK trade deal. That win could get wiped out if CBAM is applied later.
Goyal’s warning is clear. India is ready to stand up for its trade interests. If the UK thinks it can slip in a carbon tax quietly, they’ll get a strong and clear answer.
