Preparing Indian industry for carbon border measures

CBAM Roundtable: Findings and Recommendations

Based on a multi-stakeholder roundtable held online on 30 July 2026, bringing together perspectives from India, the UK and the international community.

Jointly convened by Global Advisory Alliance and Tarini Mehta and Partners, with contributions from participating organisations.

Published September 2026.

At a glance

India should move from a reactive debate about the Carbon Border Adjustment Mechanism (CBAM) towards a proactive strategy focused on industrial preparedness, capacity among micro, small and medium-sized enterprises (MSMEs), credible carbon accounting, regulatory interoperability and early international engagement.

Five priorities

Build practical monitoring, reporting and verification (MRV) capacity, particularly for MSMEs.

Develop granular data on which MSMEs are exposed, through which products, markets and production routes.

Accelerate decarbonisation through renewable energy, domestic carbon-market development and supply-chain traceability.

Engage earlier with EU and other international regulatory processes.

Pursue greater interoperability between carbon-border, carbon-pricing and MRV systems.

Executive summary

The European Union’s Carbon Border Adjustment Mechanism is changing the conditions under which carbon-intensive products compete in international markets. For India, its significance extends beyond the immediate cost imposed on exports to Europe.

The roundtable brought together perspectives from industry, trade and environmental law, sustainability, policy, strategic advisory and the media. The discussion produced a clear conclusion: India should move from a largely reactive debate about CBAM towards a proactive strategy focused on industrial preparedness, MSME capacity, credible carbon accounting, regulatory interoperability and international engagement.

CBAM creates different challenges for different parts of Indian industry. Large integrated producers generally have greater capacity to establish MRV systems, allocate resources to compliance and invest in lower-carbon production. MSMEs often lack the internal expertise, data infrastructure and financial capacity required to calculate and verify embedded emissions. Reliance on default emissions values can increase their exposure, particularly for highly export-dependent firms.

CBAM alone is unlikely to drive the decarbonisation of Indian industry. The roundtable heard that only a relatively small proportion of Indian steel production reaches the EU. India’s industrial transition will therefore depend primarily on domestic measures, including the Carbon Credit Trading Scheme (CCTS), the green steel taxonomy, renewable-energy deployment and stronger MRV infrastructure.

At the same time, carbon-border measures are becoming a wider international issue. Alongside the EU mechanism, participants discussed the UK’s planned CBAM, Serbia’s mechanism and prospective approaches elsewhere. As these systems proliferate, interoperability between carbon-accounting, verification and pricing regimes becomes a strategic concern.

The question facing India is therefore not simply whether CBAM is fair. It is whether Indian industry can build the capabilities required to compete in markets where carbon intensity, traceability and environmental performance increasingly influence market access.

The strategic shift

India needs to move from reacting to CBAM as an external compliance burden towards building carbon, energy, MRV and traceability capabilities that strengthen long-term competitiveness.

Five findings from the roundtable

Finding 1: The central vulnerability is the capability gap between large producers and MSMEs

CBAM does not affect every Indian company equally. Large integrated producers have greater capacity to establish dedicated compliance teams, develop MRV systems and invest in lower-carbon production. The roundtable heard that many large producers can manage CBAM compliance and, where necessary, direct lower-carbon production towards European markets.

For companies operating at this scale, the calculation is not only about compliance. Major Indian producers such as Tata Steel and ArcelorMittal are not only exporters to the EU but also operate production capacity within the EU itself. For these companies, CBAM increasingly intersects with decisions about the distribution of manufacturing capacity across markets, not simply the cost of compliance on exported volumes.

MSMEs face a different problem. They account for a significant share of Indian steel production but often lack the resources required for detailed carbon accounting and verification. Where companies cannot provide verified emissions data, reliance on default values can raise their carbon cost above actual emissions. For highly export-dependent MSMEs, this can become a market-access issue rather than simply another compliance cost.

The risk could increase if carbon-border mechanisms extend further downstream into manufactured products where smaller companies have greater exposure. India therefore needs an MSME-specific preparedness strategy based on better data, shared technical capacity and cluster-level support.

Finding 2: CBAM will influence decarbonisation, but domestic policy will determine its scale

India’s steel sector remains carbon-intensive, but only a relatively small proportion of production is exported and an even smaller proportion reaches the EU. CBAM can influence particular exporters without transforming the entire sector.

India’s industrial transition will depend more heavily on domestic policy and investment. Participants highlighted the CCTS, the green steel taxonomy and renewable-energy deployment as important mechanisms. Renewable electricity is increasingly commercially viable. The challenge for industrial users is moving towards reliable round-the-clock supply, including firm and dispatchable renewable energy and storage.

The objective should not be merely to make industry “CBAM compliant”. It should be to strengthen competitiveness in markets where carbon intensity, traceability and environmental performance increasingly shape purchasing and investment decisions.

Finding 3: Carbon-border measures are becoming an international system, not an isolated EU regulation

Indian businesses should not plan around the assumption that CBAM is a single European compliance exercise. Participants discussed the EU mechanism alongside the UK’s planned CBAM, Serbia’s mechanism and prospective approaches elsewhere.

As carbon-border policies proliferate, companies could face multiple methodologies, reporting standards, verification requirements and carbon-pricing systems. This creates a growing interoperability problem.

India has an interest in encouraging international recognition of credible domestic MRV and carbon-pricing systems. This is particularly important as the CCTS develops. The objective need not be identical carbon markets, but sufficiently compatible systems that avoid forcing companies to repeatedly measure and demonstrate the same underlying environmental performance.

Interoperability should become a strategic Indian policy objective.

Finding 4: India should move beyond an “unfairness-only” response

Equity remains a legitimate concern. Developed and developing economies have different historical emissions profiles, industrial structures, technological capabilities and access to climate finance. CBAM can therefore impose disproportionate adjustment costs on exporters in developing economies.

These concerns should remain part of India’s international position, but they should not constitute the entire strategy. The roundtable repeatedly returned to the need for earlier and more direct engagement.

Indian industry associations should participate in international consultation processes. Companies should monitor regulatory development before rules reach their final stages. Government should systematically collect evidence from affected sectors and translate concerns into specific proposals. International alliances should be built according to shared interests rather than simply shared opposition.

Finding 5: The long-term competitive issue is bigger than CBAM

CBAM is one component of a wider transformation in international markets. Companies increasingly face requirements relating to emissions, environmental performance, supply-chain traceability and product sustainability.

Carbon accounting should therefore not sit solely within a compliance function. Companies increasingly need to understand environmental performance across product design, raw-material sourcing, energy use, manufacturing and supply chains.

Businesses that build these capabilities early may gain more than regulatory compliance. They may gain preferential access to customers, procurement processes and markets seeking lower-carbon products. CBAM should be treated as an early indicator of a wider change in the conditions of international competition.

The strongest response is to build capabilities that strengthen competitiveness across multiple markets.

What this means for Indian businesses

Indian companies should use the next 12–24 months to build capabilities that remain valuable as carbon and sustainability requirements expand.

Establish actual exposure

Identify affected products and transactions, destination markets, production routes and the potential impact of future downstream extensions.

Strengthen MRV

Build reliable systems for measuring embedded emissions, maintaining evidence and supporting verification.

Review energy strategy

Assess renewable electricity, firm supply, storage and efficiency as operating and investment decisions, not only sustainability initiatives.

Develop supply-chain traceability

Collect better information on suppliers, raw materials and associated emissions, and integrate it into procurement and risk management.

Engage earlier with regulation

Use industry associations and direct participation to contribute evidence while EU, UK and other international rules are still being designed.

The 12–24 month test for exporters

Can you identify your exposed products, calculate and verify their embedded emissions, trace key inputs, explain your decarbonisation pathway and respond to more than one carbon-border regime?

Recommendations for Indian industry

Map CBAM exposure at product level, including export destinations, production routes and emissions profiles.

Build credible MRV systems as operational infrastructure rather than an annual reporting exercise.

Develop supply-chain traceability and progressively incorporate carbon performance into procurement.

Integrate renewable energy, storage, efficiency and lower-carbon production into investment strategy.

Engage directly and early with international regulatory consultations through companies and industry associations.

What should India ask from the EU and international partners?

India should combine equity arguments with specific proposals that reduce practical barriers facing exporters.

Technical cooperation on MRV

Support credible and accessible carbon-accounting and verification infrastructure, particularly for smaller businesses.

Targeted MSME finance and technical assistance

Direct support towards identified compliance and decarbonisation gaps rather than broad programmes disconnected from exporter needs.

Regulatory interoperability

Develop mechanisms through which credible domestic carbon-accounting and carbon-pricing systems can receive recognition within international carbon-border regimes.

What infrastructure does India need so MSMEs can comply?

MSME exposure database

Develop granular information on which MSMEs export relevant products, their production processes and destination markets.

Cluster-based MRV support

Provide shared carbon-accounting expertise, data systems and verification support for industrial clusters.

Common methodologies and tools

Develop standardised, accessible approaches for measuring emissions rather than bespoke systems for each small company.

Shared decarbonisation solutions

Where appropriate, aggregate demand for renewable energy, storage and other technologies that individual MSMEs cannot procure economically.

Finance and technical assistance

Direct domestic programmes and international commitments towards clearly identified capability and investment gaps.

Design principle for MSME support

Reduce the cost of acquiring carbon-accounting and decarbonisation capabilities, rather than simply subsidising the cost of non-compliance.

A proactive Indian CBAM strategy

The roundtable identified substantial concerns about CBAM. Questions of equity remain unresolved. WTO compatibility continues to be contested. Differences between India’s developing CCTS and established international carbon markets create practical problems. MSMEs face a much greater adjustment burden than large companies.

But opposition alone will not resolve these issues. Carbon-related trade requirements are expanding.

Internationally, India should continue making the case for equity, cooperation, financial support and regulatory interoperability. Domestically, it should accelerate the infrastructure that allows businesses to measure emissions, decarbonise production and demonstrate environmental performance.

For large companies, this means integrating carbon, energy and traceability into investment and supply-chain strategy. For MSMEs, it requires shared MRV infrastructure, cluster-based solutions, better data and targeted financial and technical support. For government, it means engaging earlier with international rulemaking while strengthening India’s carbon-market and verification architecture.

CBAM itself may affect only part of Indian industry. The capabilities it demands will matter much more widely. The strategic objective should therefore be to prepare Indian industry for an international trading system in which carbon performance and traceability increasingly influence competitiveness, investment and market access.

About the roundtable

The CBAM Roundtable was held online on 30 July 2026 as a multi-stakeholder discussion on the risks, opportunities and strategic implications of carbon-border measures for Indian businesses. The discussion considered Indian and international perspectives, with particular attention to steel, renewable energy, MSME preparedness, equity, legal issues and regulatory interoperability.

Participants

Dr Tarini Mehta
Managing Partner, Tarini Mehta and Partners

Ieva Baršauskaitė
Lead, Trade and Green Transition, International Institute for Sustainable Development

Nishtha Gupta
Global Sustainability Leader & Hurun India Women Leader 2026

Sanvid Tuljapurkar
Lead, Sustainable Trade Law, TULIP Consulting

Zohir Uddin
Director, Global Policy and Regulation, Brunswick Group

Urmi A. Goswami
Journalist, The Economic Times

Sri Lekshmi Muthu
Advocate and LL.M. (Business Law)

Karel Krticka
Founder and CEO, Global Advisory Alliance

About the convenors

Global Advisory Alliance

Global Advisory Alliance (GAA) is an international alliance of independent advisory firms serving institutional investors and companies across governance, stewardship, sustainability, responsible investment and organisational transformation. For clients, GAA provides access to trusted independent expertise with the breadth and reach to address cross-border and multidisciplinary challenges.

Tarini Mehta and Partners

Tarini Mehta and Partners is a New Delhi-based consultancy specialising in ESG, decarbonisation strategy, environmental compliance, and climate risk assessment and management. With over 40 years of combined multidisciplinary expertise and AA1000 Sustainability Assurance Provider accreditation, the firm delivers strategic, solution-oriented services to companies and organisations globally, enabling them to meet the complex challenges of today’s regulatory and sustainability landscape.