GTRI: The EU CBAM, effective January 1, is likely to force Indian steel exporters to cut prices by 15-22%

The European Union (EU) carbon tax on steel will take effect on Thursday, January 1, 2026 and is expected to damage Indian exports, with exporters being forced to cut prices by 15-22 percent, according to a report by the Global Trade Research Initiative (GTRI) think tank on Wednesday, December 31.

It says that the reduction in exporters' prices will be used by EU importers to pay the Carbon Boundary Adjustment Mechanism (CBAM) tax.

Indian exporters will not pay the tax directly, as importers from the EU registered as authorized CBAM declarants must purchase CBAM certificates related to embedded emissions in imported goods.

But this cost will be pushed back to Indian exporters, GTRI said.

"From January 1, 2026, every batch of Indian steel entering the EU will cost carbon emissions as the Carbon Boundary Adjustment Mechanism (CBAM) moves from reporting to the payment stage," the message says.

"CBAM's complex data and verification requirements will dramatically increase compliance costs, displacing many small exporters from the EU market as a whole," he added.

Accurate measurement of emissions is becoming the foundation of competitiveness in the EU market.

"CBAM is not an exercise in corporate sustainability. This is the emissions accounting mode at the station level. Emissions should be calculated for each installation, covering direct fuel combustion and electricity consumption," GTRI said.

Manufacturing exporters should monitor fuel usage,