Exporting to Europe in the CBAM Era: Compliance, Carbon, and Competitiveness
- Dimpal Dewasi
- Apr 12
- 3 min read
India's export-intensive industries are poised to enter an entirely new level of regulatory supervision as the European Union's climate agenda goes further than ever before. The landmark policy tool called Carbon Border Adjustment Mechanism (CBAM) has already started shaping the rules of engagement in international trade. The challenge for the Indian exporter who operates in industries such as steel, aluminum, cement, and fertilizers would be verifiable cross-border compliance with climate-linked documentation.
Under this system, the EU will impose a carbon price on chosen imports from 2026, according to their embedded greenhouse gas emissions. This is one aspect of a wider attempt to avoid "carbon leakage" and make sure that overseas producers face the same carbon cost pressures as EU-based producers.
CBAM: An Emerging Trade Barrier with Climate Roots
CBAM is introduced in two stages. Importers into the EU will need to report the carbon embedded in their products between October 2023 and the end of 2025. Beginning January 2026, they will need to pay a financial adjustment to account for the emissions' cost. This basically expands the EU's carbon price mechanism to carbon-intensive imports.
Products already in scope are:
Iron and steel
Aluminum
Cement
Fertilizers
Hydrogen
India, being a major exporter of steel and aluminum to Europe, exported products worth more than $8.2 billion under these categories to the EU in FY 2023 itself. Without emissions reporting compliant with the new regulations, exporters can risk being penalized, subject to price mark-ups in the form of default carbon values, or even entry refusal.
Simplification, But Not Without Responsibility
In February 2025, the European Commission launched a CBAM simplification package aimed at cutting administrative burden particularly for small importers. Among the reforms:
A de minimis exemption for imports of less than 50 tonnes, possibly excluding 90% of importers but covering 99% of emissions.
Simplified declarant authorization and emissions calculation procedures;
Updated systems for handling financial liabilities under CBAM;
Tougher anti-abuse and anti-circumvention strategies aligned with EU member states.
These steps intend to facilitate compliance but do not lower the expectation from exporters such as India of on-time and correct documentation.
The Bottleneck: Documentation and Compliance Infrastructure
Even with policy changes, a wide disparity continues on the export side. Indian manufacturers and traders, with the majority of them not small or large, lack the digital infrastructure to facilitate multi-jurisdictional document demands, end-user authentication, and emissions-based declarations.
Subjective systems and dispersed workflows are threatening with:
Delayed customs clearance
Utilization of default (and higher cost) emissions values
Incomplete or inconsistent paperwork causing trade tension.
Addressing the Gap with TradeVeda by Liquidmind
This is where TradeVeda, Liquidmind's AI-driven compliance platform, enters the picture. TradeVeda does not create emissions data but addresses the critical issue of document consistency, cross-border regulatory harmonization, and real-time trade compliance verification, all key to CBAM readiness.
Core Capabilities of TradeVeda
Tracks regulatory requirements across the EU, U.S., India, and other jurisdictions in real time
Screens buyers, end-users, and destinations for sanctions, embargoes, and diversion risks
Verifies export documents (invoices, Bills of Lading, end-user statements) for accuracy and compliance
Aligns documentation with destination-specific export laws and CBAM obligations
Alerts users to expired permits, irregular shipment routes, or compliance red flags
India's Export Moment: Adapt or Miss the Opportunity
As India is negotiating trade deals with the EU and UK, the threshold for compliance and transparency is increasing. CBAM is the first of a series of environmental trade mechanisms that will likely appear in large economies. The exporters who move now—investing in digital platforms such as TradeVeda can maintain competitiveness, safeguard margins, and position themselves as forward-thinking global suppliers.
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