A joint report by the CII and IIM Ahmedabad highlights the urgent need for India to develop a transparent, reliable carbon-pricing system to maintain export viability as EU climate regulations, including CBAM, come into force.
India needs a credible domestic carbon-pricing system if its exporters are to stay competitive as climate-related trade rules tighten, according to a joint report by the Confederation of Indian Industry and IIM Ahmedabad. The study argues that a well-structured carbon market could both support industrial decarbonisation and give Indian companies a clearer way to show the carbon costs they face in international trade.
The report places particular emphasis on sectors such as steel, cement, aluminium, fertilisers, refining and petrochemicals, where emissions are high and exposure to export markets is significant. It says the issue has become more urgent since the European Union’s Carbon Border Adjustment Mechanism, or CBAM, moved into its definitive phase on 1 January 2026.
To make any domestic carbon regime useful for exporters, the report says India would need a strong registry, reliable monitoring, reporting and verification systems, and a transparent pricing mechanism that can stand up to scrutiny. It says such measures would help firms document eligible domestic carbon costs, which matters for companies seeking recognition under CBAM.
The report also recommends a transparent price-collar approach to give companies more certainty over long-term investment decisions. It presents an illustrative range of $22 to $60 per tonne of carbon dioxide equivalent, with $35 used as an example within that band, while stressing that these are policy scenarios rather than proposed Indian carbon prices or government commitments. It adds that India should publish a clear post-2026-27 path for sectoral emissions-intensity targets and keep an emissions-intensity framework in place while industries continue to expand, with a possible shift to absolute caps later. It also warns that any wider use of offsets would need strong integrity safeguards to avoid flooding the market with cheap credits and weakening the carbon price.
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