Study: EU Carbon Border Mechanism May Cost India 0.03% of GDP

A study by the Centre for Social and Economic Progress (CSEP) estimates that India’s GDP could decline by 0.02–0.03% between 2025 and 2030 due to revenue outflow, unless the impact of the European Union’s Carbon Border Adjustment Mechanism (CBAM) is mitigated through the introduction of a domestic carbon pricing system.

According to the analysis, the EU could collect nearly 5,500 crore rupees (€539 million) from Indian exporters in 2030.

The report highlights that introducing a domestic carbon tax alongside CBAM could result in a slight 0.01% increase in GDP, as part of the tax revenue would remain within the country, softening negative economic impacts.