India-EU trade deal text falls short on recognising local CBAM accreditors, Pg13

Key Highlights:

• India and the European Union (EU) have agreed to 'most favoured nation' (MFN) treatment on the Carbon Border Adjustment Mechanism (CBAM) in their trade deal.
• The trade deal falls short of recognizing independent Indian accreditation bodies for CBAM compliance, potentially increasing compliance burdens for Indian exporters.
• The EU will "endeavour to support" India's greenhouse gas emission reduction efforts, but is not obligated to do so.
• The carbon tax ensures that imported carbon-intensive goods into the EU bear a cost starting January 2026.

Detailed Insights:

• The agreement allows for technical dialogue between India and the EU regarding mutual recognition of accreditation bodies for verifying CBAM compliance.
• Currently, no National Accreditation Board for Certification Bodies (NABCB)-accredited Indian agencies are recognized under EU regulations for CBAM.
• India and the EU will engage in technical exchanges on various aspects of CBAM implementation, including product scope, emissions coverage, and verification processes.
• The MFN clause in the deal ensures that India receives the same CBAM concessions that the EU has promised to the US, potentially benefiting Indian industries.
• Several developing nations, including Brazil, China, and South Africa, have raised concerns about CBAM at the WTO, viewing it as discriminatory.

Key Concepts Involved:

• Carbon Border Adjustment Mechanism (CBAM): A carbon tax on imported goods based on their carbon emissions during production.
• Most Favoured Nation (MFN): A principle of non-discrimination in trade, ensuring equal treatment between countries.
• Accreditation Body: An organization that assesses and formally recognizes the competence of certification bodies.