'Irrational standards set by EU act as trade barrier': Piyush Goyal slams bloc's rules on deforestation, carbon tax

The European Union’s (EU) deforestation regulation and carbon tax are unfair and would impact Indian industries, Commerce and Industry Minister Piyush Goyal said, adding EU’s safeguard measures on some steel products are irrational too.

“Irrational standards set by the European Union act as a trade barrier to expanding trade,” Goyal, said at an event in New Delhi. The Union minister also slammed the bloc for “unfair rules” such as a proposed EU carbon border tax known as the carbon border adjustment mechanism (CBAM), adding such measures disrespect and seek to demolish the premise of the 2015 Paris climate agreement.

Addressing industry and representatives of EU on the launch of Federation of European Business in India (FEBI), he said Indian industries are “confronted with unfair rules of deforestation, rules around CBAM (Carbon Border Adjustment Mechanism) and various other measures”.

Major agriculture-exporting countries, including Brazil, India, Indonesia and the US, have raised objections to the EU Deforestation Regulation (EUDR).

EU last year approved the world’s first plan to impose tariffs on imports of high-carbon goods, including steel, cement and aluminium, aiming to reach net-zero greenhouse emissions by 2050. EU officials have been trying to win over countries like China, South Africa and India that are opposed to CBAM.

The EUDR was adopted on May 16, 2023, and seeks to prevent the import of specified goods contributing to deforestation and forest degradation in the EU market.

The covered products include coffee, leather, oil cake, wood furniture, paper and paperboard with plans to expand the product list further.

The Global Trade Research Initiative (GTRI) said India’s exports of products like coffee, leather hides and paperboard worth $1.3 billion annually to the European Union could be impacted due to the regulation.

The CBAM or carbon tax (a kind of import duty) will come into effect from January 1, 2026.

Finance Minister Nirmala Sitharaman recently said the CBAM is unilateral and arbitrary and will hurt India's exports after its implementation by EU.

Last month, India proposed imposition of retaliatory customs duties, under WTO norms, on certain value of goods imported from EU as the two sides failed to reach a consensus on EU’s safeguard measures on some steel products.