New Delhi: A recent study conducted by researchers at the Indian Institute of Management (IIM) -Lukkino and Institute of Management Technology (IMT) has highlighted India’s Carbon Border Adjustment Mechanism (CBAM) for the small and medium -shaped steel enterprises (sms) of India.
The CBAM implemented in October 2023 aims to carry carbon content-based fees from countries with low climate rules including India, such as steel emissions and inferior products. While the European Union justifies the policy as a means of preventing carbon leakage and promoting decarbonization, the study examines its implications in terms of equity and viability.
Kushik Ranjan Bandopadhyay co-author, IIM-Lucknow’s Center for Business Sustainability Chairperson, and Kasturi Das, a professor at IMT-Ghaziabad and a Fulbright-Kalm Climate Visiting Partner at IMT-Ghaziabad, a professor and a Fulbright-Kalm Climate Visiting Partner, is the first to test whether the regular impact of European Union, “Brusails effect“CBAM can run decarbonization in India’s steel sector. It was published International Environmental Agreement: Politics, Law and Economics Journal.
Conclusions suggest that while large integrated steel plants can adapt their processes to produce low carbon steel for the European Union market, SMEs can struggle due to financial, technical and lack of capacity. It can lead to a dual-motion decarbonation process, which is in favor of big corporations, leaving small players weak.
“Research team found that large integrated steel plants may adapt their production to the supply of low-carbon steel for the European Union market, small and medium-sized enterprises may face challenges due to financial, technical and lack of capacity,” Bandopadhyay told the news agency PTI. He said, “This can create a dual-dicerbonication process, to leave the big players and to leave small people weak. Adequate support for small and medium-sized enterprises to deal with their emission reduction can lead to uneven results within the industry,” he said.
Studies also warns that unilateral implementation of policies such as CBAM in various courts can increase costs for exporters, can be complicated by trade relations, and potentially obstruct global climate cooperation. Given India’s position as the world’s second largest steel producer, ensure that CBAM policies are align with the principles of equity and fairness to achieve global climate goals.
41 Based on qualitative analysis and insight from major stakeholders, research-Representatives of steel industry, government officials, academics and members of civil society-considering the same mechanisms to provide adequate support to the Union and other nations, such as technology transfer and capacity-building assistance to ensure a reasonable and effective decarbonation process.
These findings have significant relevance in the ongoing India-European Association conversation on CBAM within the discussions of the comprehensive free trade agreement, highlighting the need for balanced and cooperative climate policies in a fragmented global order.
“If the European Union is eager to carry forward decarbonation efforts in its business partners from global south like India, then it is necessary to complement regulatory measures such as CBAM with supporting initiatives including technology transfer and capacity-manufacturing assistance,” said Das.
He said, “In a fragmented global order, it is necessary to promote collaborative decarbonization strategies for meaningful climate action,” he said.
