India-UK Free Trade Agreement & Carbon Border Adjustment Mechanism (CBAM)
The India-UK free trade agreement does not currently include a provision regarding the United Kingdom's proposed Carbon Border Adjustment Mechanism (CBAM).
- The UK plans to implement CBAM by 2027.
- CBAM is considered a trade barrier by India.
Provisions for Future Implementation
- Although CBAM is not part of the current agreement, India has secured a contingency plan for any future implications:
- If the UK imposes CBAM in the future and it affects India's trade benefits, India reserves the right to take counterbalancing measures.
- This understanding is documented in a note verbale, which is a diplomatic communication between countries.
- India can potentially withdraw concessions as part of these measures.
Ongoing Negotiations with the EU
- India is also engaged in discussions with the European Union, which is considering implementing its own CBAM.
- The negotiations aim to conclude a trade pact that takes into account the potential impact of CBAM.
