EU CBAM in 2026: What Indian Exporters Must Do Now That Carbon Costs Are Real

For three years, the EU's Carbon Border Adjustment Mechanism (CBAM) was a reporting exercise. That changed in January 2026. The definitive regime is now live: EU importers must purchase CBAM certificates priced against the EU ETS to cover the embedded emissions of goods they bring in. For Indian exporters of steel, aluminium, cement, fertilisers and hydrogen, carbon intensity is no longer a sustainability talking point — it is a line item on your customer's invoice.

What changed in 2026

During the 2023–2025 transitional phase, importers only had to report embedded emissions. Under the definitive regime:

• EU importers must surrender CBAM certificates for the embedded emissions in covered goods, priced off weekly EU ETS auction averages.

• Suppliers who cannot provide verified, installation-level emissions data get assigned default values — typically set conservatively high, which makes their goods more expensive than competitors with real data.

• A carbon price already paid in the country of origin can be deducted — which is exactly why India's Carbon Credit Trading Scheme (CCTS) matters to exporters.

Which Indian exporters are affected

CBAM currently covers iron and steel, aluminium, cement, fertilisers, hydrogen and electricity, including many downstream products such as screws, bolts and structures. The EU is India's largest export market for several of these categories, and steel and aluminium alone account for a large share of India's CBAM exposure. If your products fall under the covered CN codes — or you supply someone whose products do — your emissions data is now part of your customer's cost calculation.

Five things to do this quarter

• Measure embedded emissions at installation level. CBAM requires production-route-specific data per installation, not a company-wide average.

• Get the data verified. Unverified numbers will be replaced by punitive defaults. Build an audit-ready GHG accounting system now.

• Share actual data with your EU importers proactively. Exporters who make their importers' compliance easy win the repeat orders.

• Cut carbon intensity where it is cheapest: renewable power purchase, energy efficiency, and process heat improvements directly reduce the certificates your buyer must surrender.

• Track CCTS developments. A domestic carbon price paid in India may be deductible from CBAM liability, turning compliance at home into competitiveness abroad.

How Csquare helps

Csquare builds the foundation CBAM compliance sits on: GHG accounting, decarbonisation strategy and ESG reporting for Indian manufacturers, plus verified carbon credits for the emissions you cannot yet eliminate. If your buyers are asking for CBAM data and you do not have a defensible answer yet, talk to us — the earlier you start measuring, the cheaper compliance gets.