Europe’s new Carbon Border Adjustment Mechanism (CBAM), a levy on imports based on their carbon emissions, is compelling Indian steel exporters to rethink production strategies as the cost of selling into the EU rises due to carbon-intensive manufacturing processes. Indian producers, which are heavily reliant on coal-based blast furnaces, risk sharp margin pressure unless they adopt cleaner technologies, prompting some companies to explore lower-emission routes such as direct reduced iron and electric arc furnaces to remain competitive in one of their largest markets.
The EU’s carbon tax is reshaping trade dynamics, encouraging Indian steelmakers to pursue green investments and consider alternative export markets outside Europe to avoid high carbon charges. At the same time, the Indian government has introduced “green steel” guidelines and is expanding renewable energy capacity to support decarbonisation, though shifting to low-emission steel production at commercial scale will require significant time, capital and infrastructure development.
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