NEW DELHI/BERLIN, October 25, 2026 – India is expanding financial assistance for exporters confronting the European Union’s Carbon Border Adjustment Mechanism (CBAM), with Commerce and Industry Minister Piyush Goyal announcing plans to cover the full cost of international certification for micro and small enterprises. The initiative also includes graduated support for larger businesses and efforts to develop domestic verification capabilities.
Speaking during a visit to Berlin on 23 October, Goyal said the government was prepared to finance certification expenses for smaller exporters through its Export Promotion Mission. The government is also examining options to build verification capacity in India, potentially reducing expenditure on emissions documentation and compliance with European environmental requirements.
The measures address the administrative and technical costs facing Indian manufacturers supplying the EU, particularly producers of steel, aluminium and other industrial goods. Beyond the carbon-related costs associated with covered imports, exporters must collect emissions data, arrange independent verification and provide documentation that meets European requirements.
Export Promotion Mission provides the funding framework
India’s initiative builds on the Export Promotion Mission, approved in November 2025 with funding equivalent to approximately €2.36 billion over six financial years. The programme combines export financing, market-access assistance, international certification support and measures intended to improve the competitiveness of Indian businesses.
A central component is the Trade Regulations, Accreditation and Compliance Enablement programme (TRACE), introduced in February 2026 and substantially expanded in July.
Under revised rules issued by India’s Directorate General of Foreign Trade on 1 July 2026, eligible micro and small enterprises can receive reimbursement of up to 95% of qualifying certification and compliance expenditure. Medium-sized businesses are eligible for reimbursement of up to 80%.
The standard annual reimbursement ceiling is equivalent to approximately €47,000 per exporter identification code per financial year. Additional assistance may be considered in exceptional cases. The revised rates replaced the original February 2026 reimbursement levels of 60–75%.
Eligible expenditure includes testing, inspection, certification and conformity-assessment services. Payments are divided into two stages, with the second instalment linked to exports associated with the relevant certification.
Goyal’s latest commitment to finance 100% of certification costs for smaller exporters would exceed the existing 95% reimbursement ceiling. However, revised implementing rules confirming an automatic entitlement to full reimbursement have not been established. The announcement therefore represents a policy commitment rather than a confirmed amendment to the existing framework.
Whether particular CBAM verification services qualify for support will depend on the applicable eligibility lists and programme conditions.
Steel and aluminium carry different CBAM exposures
The EU’s CBAM entered its definitive phase on 1 January 2026, covering specified imports of iron and steel, aluminium, cement, fertilisers, electricity and hydrogen. The mechanism is designed to align the carbon cost of covered imports with the costs faced by European producers under the EU Emissions Trading System (EU ETS).
For Indian steelmakers, exposure depends on production technology, fuel consumption, emissions intensity and the availability of independently verified installation-level data. Integrated plants using coal-intensive blast-furnace production generally face greater carbon exposure than less emissions-intensive facilities. Actual liabilities, however, depend on the applicable product methodology, benchmarks and verified emissions.
Aluminium producers face a different set of considerations. Electricity prices and the emissions intensity of production affect their competitiveness, while the current CBAM calculation for aluminium covers specified emissions categories rather than automatically pricing every indirect emission associated with electricity consumption. This distinction is relevant to producers evaluating renewable electricity contracts and investments in cleaner power supplies.
Product-specific modelling published by Fastmarkets in October 2026 estimated an indicative CBAM cost of €277.60 per tonne for Indian hot-rolled coil produced through the blast-furnace/basic-oxygen-furnace route, using applicable default values and third-quarter carbon pricing.
For one category of unwrought, unalloyed aluminium, the corresponding Indian default-value scenario was approximately €55.12 per tonne.
These estimates do not represent universal CBAM charges on Indian steel and aluminium. Actual liabilities can differ substantially where verified installation emissions replace default values or other applicable adjustments affect the calculation.
The estimates nevertheless demonstrate that certification assistance addresses only part of exporters’ exposure. Even when emissions documentation is fully subsidised, the carbon-related costs borne by European importers remain and may be passed back to Indian suppliers through commercial contracts.
Domestic technical services face EU accreditation requirements
India’s plans to develop domestic verification capacity could reduce reliance on external technical advisers and overseas inspection services. Indian engineering companies, testing laboratories and emissions specialists could take on a larger role in collecting production data, establishing monitoring procedures, reviewing emissions calculations and preparing industrial facilities for independent verification.
The regulatory distinction between technical preparation and statutory verification remains critical. Under the European Commission’s CBAM accreditation framework, mandatory verification must be performed by verifiers accredited through the relevant EU national accreditation bodies.
Companies based outside Europe may seek the necessary accreditation, but approval from Indian authorities alone does not satisfy the EU requirement. Verification reports must also comply with the prescribed European procedures and Registry requirements.
Consequently, domestic Indian organisations can provide technical preparation and pre-verification services, while statutory CBAM verification remains subject to the applicable European accreditation rules.
Connecting these two service categories will be important for manufacturers seeking to use actual emissions data instead of potentially less favourable default values. Local certification or technical approval cannot substitute for mandatory EU-accredited verification.
CBAM remains separate from India-EU free trade arrangements
India’s compliance initiative coincides with developments in bilateral trade relations. The EU and India concluded negotiations on a free trade agreement in January 2026, and the European Commission submitted proposals for its signature and conclusion in September. The agreement has not yet entered into force.
Bilateral merchandise trade reached approximately €118 billion in 2025, underscoring the importance of market access, industrial standards and regulatory costs for businesses operating between the two economies.
The proposed trade agreement and CBAM address different regulatory areas. A free trade agreement changes market-access conditions and tariffs, whereas CBAM imposes carbon-related obligations on specified imported goods under EU legislation.
Indian exporters could therefore benefit from improved tariff treatment while continuing to face emissions-reporting, verification and certificate-related commercial exposure. For manufacturers operating on narrow margins, the additional costs could affect the benefits gained through improved customs access.
Suppliers may secure more favourable tariff conditions yet lose part of their commercial advantage through high default emissions values, insufficient verification evidence or carbon-cost adjustments imposed by European buyers.
Reimbursement could ease compliance pressures on smaller exporters
Public support could help smaller Indian manufacturers participate in European supply chains by reducing the cost of establishing emissions-accounting and certification systems. Such businesses frequently lack dedicated teams to monitor emissions across production processes, energy inputs and material supply chains.
Subsidised compliance preparation could improve the consistency of emissions records and help exporters compete for contracts requiring independently verified information. Larger industrial groups could also benefit if an expanded domestic technical-services market reduces verification-related expenditure.
The programme’s practical impact will depend on implementation, including clear guidance on eligible services, documentation standards, reimbursement conditions and cooperation between Indian service providers and EU-accredited verifiers.
The timing of payments is another consideration because exporters may have to finance certification expenditure before receiving reimbursement. For banks and other lenders, this creates a distinction between reimbursable compliance costs and the potentially larger financing requirements associated with carbon liabilities, industrial investment and contractual price adjustments.
Government support for emissions verification does not, by itself, provide the capital required to modernise production equipment, reduce fossil-fuel consumption or secure cleaner energy supplies.
Industrial emissions remain central to export competitiveness
India’s initiative could reduce the administrative cost of meeting European requirements relative to competing export origins, including Turkey and China. Its longer-term commercial impact will also depend on whether compliance assistance is accompanied by measurable reductions in industrial emissions.
For steelmakers, potential areas of investment include energy efficiency, lower-emission production technologies, material recovery and alternative production routes. For aluminium manufacturers, process improvements and energy procurement remain important to competitiveness, even where current CBAM rules treat electricity-related emissions differently.
European importers will continue to assess suppliers against production costs, delivered prices, verified emissions, contractual reliability and exposure to carbon-adjustment liabilities. India’s government is seeking to improve exporters’ position by reducing the expense of preparing the documentation needed to meet European requirements.
The approach could offer a reference for other industrial exporting economies seeking to maintain access to EU markets while addressing CBAM-related compliance costs. However, subsidising certification and reducing emissions are distinct policy objectives: the former lowers administrative expenditure, while the latter affects the carbon intensity of production and the associated exposure under the EU mechanism.
