Synopsis: The European Union (EU) is open to considering India's proposal for the domestic collection of carbon taxes on steel, aluminum, and cement shipments under the Carbon Border Adjustment Mechanism (CBAM) set to begin in 2026. While the EU sees merit in India collecting these taxes, detailed discussions are required. Additionally, EU officials are addressing Indian exporters' concerns regarding reporting norms for carbon-intensive goods under CBAM, including data privacy.Article:The European Union (EU) has expressed its willingness to entertain India's proposal for the domestic collection of carbon taxes on steel, aluminum, and cement shipments, which are set to be subject to the Carbon Border Adjustment Mechanism (CBAM) from January 1, 2026. However, the EU emphasizes that this consideration is subject to further detailing and discussions, according to officials monitoring the matter.European Commission (EC) officials have also provided assurance to Indian exporters, stating that their specific concerns regarding reporting norms for carbon-intensive goods during the transitional phase of CBAM, which commenced on October 1, will be addressed promptly. This includes addressing worries related to data privacy.India's proposal regarding the collection of the carbon tax levied by the EU has not been dismissed, as the CBAM is not primarily a revenue generation mechanism. EU officials argue that, theoretically, it could be implemented since Indian collection of carbon tax would raise the cost for exporters of carbon-intensive products, which aligns with the EU's goals. However, they stress that a more detailed proposal and discussion are necessary.The CBAM is an EU regulation designed to impose a "fair" carbon price on items identified as carbon-intensive, originating from non-EU countries. This would be realized through increased import levies that take effect from January 2026. EU companies already account for their carbon emissions through the bloc's Emission Trading System.The products covered by CBAM include cement, iron and steel, aluminum, fertilizers, electricity, and hydrogen. The Indian industries that could be most affected are iron and steel, followed by aluminum and cement.If India is allowed to collect the EU's carbon tax, the amount collected could be substantial. Estimates suggest that additional levies of up to 20-35 percent might be imposed on Indian exporters of steel and aluminum if carbon emission compliance cannot be established.However, the Indian government aims to ensure that the carbon tax imposed on Indian products is as low as possible. It intends to establish a fully functional Carbon Credit Trading System by January 1, 2026, and obtain EU recognition, enabling compliance for most exporters.While the transitional phase of CBAM has already begun, with exporters required to specify the quantity of CBAM goods shipped and their embedded emissions, shippers have until January 2024 to submit the first quarterly report. EC officials have held workshops with Indian exporters, during which several doubts were raised concerning the data to be submitted and the protection of sensitive information. Officials have assured that they will address all doubts raised.Conclusion:The EU's willingness to consider India's proposal for the collection of carbon taxes on steel, aluminum, and cement shipments under the Carbon Border Adjustment Mechanism (CBAM) offers hope for Indian exporters. However, the details of the proposal and discussions will play a crucial role in determining the path forward. Addressing concerns related to reporting norms and data privacy is also essential to ensure a smoother transition into the CBAM framework.