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Economic think tank the Global Trade Research Initiative (GTRI) in its latest report has said that India's exports worth $775 million to the UK may be impacted due to Britain's decision to introduce carbon tax on products such as iron and steel, aluminium, fertiliser and cement, from 2027.  The UK government on December 18 decided to implement its Carbon Border Adjustment Mechanism (CBAM) starting 2027.

Economic think tank said the UK calls it the import carbon pricing mechanism. The CBAM will initially focus on sectors like iron, steel, aluminum, fertiliser, hydrogen, ceramics, glass, and cement. The UK, after the European Union (EU), will be the second economy to implement CBAM. Britain will soon work out detailed rules of the scheme, but it will in principle follow the EU model.

GTRI Co-Founder Ajay Srivastava said ‘the UK CBAM aims to prevent carbon leakage. Carbon leakage is the phenomenon of companies moving production to countries with weaker environmental regulations to avoid paying carbon prices in the UK. Thus, the main aim is to ensure imports are subject to the same rate of carbon tax as the UK producers pay through UK's Emission Trading System (ETS).’ He added that by doing so, the UK government hopes to provide fair competition for its domestic manufacturers and ensure that its decarbonisation efforts contribute to a real reduction in global emissions.