India has strongly objected to the European Union’s planned carbon tax under the Cross-Border Carbon Border Adjustment Mechanism (CBAM), which may apply tariffs of 20-35% on Indian steel, aluminum, and cement exports.

Commerce and Industry Minister Piyush Goyal stated that India would consider retaliatory steps if these carbon-based tariffs are enforced. The dispute arises as both sides are negotiating a Free Trade Agreement, aimed for completion by the end of 2025.

Goyal warned that CBAM could cancel out the benefits of reduced tariffs from the FTA. He criticized the EU's approach as unfair and accused developed nations of failing to deliver climate finance and technology support promised in the Paris Agreement.