EU CBAM 2026: A Practical Guide for Indian Exporters

What CBAM is and why it exists

CBAM is an EU regulation that applies a carbon price to certain imports, matching the price EU producers pay under the EU Emissions Trading System (EU ETS). Its purpose is to stop carbon leakage, where production moves to countries with weaker climate rules.

Instead of a flat tariff, CBAM charges for the greenhouse gases actually emitted in making the imported product, called embedded emissions. Goods made with less carbon pay less.

Which products are covered

CBAM covers six sectors, identified by their customs (CN) codes. Some downstream products are included too, such as certain steel and aluminium articles, screws, bolts and structures.

• Iron and steel
• Aluminium
• Cement
• Fertilisers
• Hydrogen
• Electricity

The timeline: from reporting to paying

The transitional period ran from 1 October 2023 to 31 December 2025. Importers filed quarterly reports on embedded emissions but paid nothing.

The definitive period began on 1 January 2026. Only authorised CBAM declarants can import covered goods above the small-importer threshold, they declare embedded emissions annually, and they must surrender CBAM certificates priced in line with the EU ETS. The first annual declaration, covering 2026 imports, falls due in 2027.

In 2025 the EU simplified the rules, including an annual threshold that exempts importers bringing in small quantities of covered goods. Most regular industrial buyers of Indian steel and aluminium remain above it.

Why the burden falls on Indian producers

The EU importer is legally responsible, but only the producer knows how much fuel, electricity and precursor material went into each tonne. That is why EU buyers send their Indian suppliers data templates and questionnaires.

If a supplier cannot provide credible figures, the importer can use default values published by the European Commission. Defaults are intentionally conservative, so they usually make your product look more carbon-intensive and more expensive to import than it really is. Over time, buyers are likely to favour suppliers whose actual data lowers their CBAM bill.

What data your EU buyer will ask for

CBAM data is calculated at installation level and then attributed to the goods produced. Expect to be asked for:

• Installation details: location, production processes and production routes
• Fuel and material inputs, including process emissions such as those from reductants or limestone
• Electricity consumption, and for some goods the emissions factor of that electricity
• Precursors bought in, such as pig iron, crude steel or unwrought aluminium, with their own embedded emissions
• Production volumes for the reporting period so emissions can be allocated per tonne
• Any carbon price already paid in India, which may be deductible

Is a product carbon footprint enough?

Not on its own. An ISO 14067 product carbon footprint is a good foundation, and many of the inputs overlap. But CBAM uses its own system boundaries, its own rules for precursors and its own monitoring methods. Figures prepared for a sustainability report or an EPD usually need to be recalculated for CBAM.

Five steps to take now

Most Indian exporters can get CBAM-ready in a few weeks if they start with the right scope.

• List every product you ship to the EU by CN code and confirm which are in scope
• Map each installation, its production routes and the precursors you buy
• Set up monthly collection of fuel, electricity, material and production data
• Calculate embedded emissions per product using the CBAM methodology and keep the workings
• Share completed data templates with your EU buyers before they fall back on default values

The opportunity behind the compliance

CBAM is often described as a cost, but for efficient Indian producers it is also a sales argument. A plant that can show lower embedded emissions than the default, with documented data, gives its EU customer a lower CBAM bill. That is a concrete reason to stay on, or join, a European approved-supplier list.