India’s Commerce and Industry Minister, Piyush Goyal, isn’t holding back when it comes to the EU and UK’s proposed carbon tax on imports. Speaking at the Columbia India Energy Dialogue 2025 in New Delhi, Goyal made it crystal clear: “If they put in a carbon tax… we will retaliate.” He didn’t mince words, calling the EU’s Carbon Border Adjustment Mechanism (CBAM) “very, very irrational.” Goyal argues that these regulations would hurt both the EU and India’s economies, adding that it would just increase inflation and costs in Europe while potentially opening doors for India.
The carbon tax, slated to kick in by January 2026, aims to slap tariffs of 20-35% on carbon-heavy imports like steel, aluminum, and cement. India, however, sees this as an unfair move that disproportionately targets developing nations. It goes against the idea of “common but differentiated responsibilities,” which has been a key principle in international climate agreements.
In response, India isn’t just talking; they’ve made it clear that retaliatory duties could be on the table if the tax is enforced. Goyal also pointed out that such actions could derail ongoing free trade talks between India and the EU.
The proposed tax has sparked serious concern in India, especially among industries like steel and aluminum, which are heavily reliant on coal. Larger companies are already pivoting to green initiatives, but smaller players might find themselves in a tough spot without enough support.
As this issue continues to unfold, both sides are under pressure to find a diplomatic solution that balances environmental goals with fair trade practices.
