India would retaliate against European Union and United Kingdom carbon border taxes with equivalent measures, Commerce Minister Piyush Goyal warned, according to Politico.
Any country which implements such taxes, which are nontariff barriers to trade — India will respond with full measure.
He elaborated that New Delhi would impose countervailing duties on “products of interest” from offending nations, signalling an escalation beyond previous criticisms.
The threat targets the EU’s Carbon Border Adjustment Mechanism (CBAM) and the UK’s planned 2027 levy, which India—alongside China and Brazil—views as protectionist instruments unfairly penalising developing economies. Goyal condemned the CBAM framework as failing “the test of fair play,” arguing that historically high-emission developed nations should bear greater climate burdens.
The warning follows private diplomatic efforts seeking exemptions for India’s steel, fertiliser, and cement sectors. It directly impacts ongoing EU-India free trade agreement talks, which Goyal and European Commission Executive Vice-President Maroš Šefčovič aim to conclude this year.
The carbon tax remains the most significant obstacle, despite the EU simplifying CBAM rules on Wednesday to exempt most importers.
Goyal emphasised any trade pact must be “win-win,” noting the UK’s carbon tax would mirror the EU’s design. This stance complicates London’s newly minted trade deal with New Delhi finalised last month.
Meanwhile, a European Commission spokesperson rejected the protectionism allegations:
This is a climate measure designed in compliance with WTO rules and based on the actual emissions embedded in goods.
The Commission clarified the levy aims not to generate revenue but to “accelerate the uptake of carbon pricing instruments and foster the green transition in third countries.”
