EU CBAM for Indian exporters: what the definitive period asks of steel, aluminium and cement suppliers

For Indian exporters of steel, aluminium, cement and fertilisers, the EU's Carbon Border Adjustment Mechanism (CBAM) stopped being a reporting exercise on 1 January 2026. EU importers now pay — from 2027, for goods imported in 2026 — for the emissions embedded in what they buy. The figures they use come either from their suppliers or from default values that are deliberately unfavourable. This guide explains what is covered, what an Indian producer is asked for, and how the costs are worked out.

What changed on 1 January 2026?

CBAM's transitional period (October 2023 to December 2025) only required reports. The definitive period began on 1 January 2026, under Regulation (EU) 2023/956 as simplified by Regulation (EU) 2025/2083¹:

• Only authorised CBAM declarants may import covered goods into the EU above the threshold.
• Importers bringing in 50 tonnes or less of covered goods a year (by net mass) are exempt — electricity and hydrogen aside¹.
• CBAM certificates go on sale from 1 February 2027, and the first annual declaration and surrender — for goods imported in 2026 — is due by 30 September 2027¹.

The importer carries the obligation. But the importer's cost depends on the embedded emissions of the goods, and only the producer can measure those.

Which goods are covered?

CBAM covers six groups of goods, listed by customs code in its Annex I²:

The European Commission proposed in December 2025 to add about 180 downstream products with high steel or aluminium content from 2028; the Council and Parliament had not agreed the scope by October 2026⁶.

What will your EU customer ask you for?

For each installation and good, the EU importer needs the embedded emissions — direct emissions from production, indirect emissions from the electricity used where they count, and the emissions of precursors such as clinker in cement or pig iron in steel — calculated with the EU's methods². In practice, an Indian producer is asked to:

1. keep a monitoring plan for the installation;
2. prepare an annual emissions report for each good, on the Commission's template, including any carbon price paid;
3. have it verified by an EU-accredited verifier; and
4. share it with the importer — optionally through the CBAM operator registry, where the Commission recommends producers register².

Verification is new in 2026. Verifiers could register from 1 September 2026, and verification reports will be issued in the CBAM registry from January 2027⁵.

Actual emissions or default values?

Where verified actual emissions are not available, the importer must use default values set by the Commission for each country and product, published in December 2025⁴. They carry a mark-up that grows each year: 10% for 2026, 20% for 2027 and 30% from 2028 (lower for fertilisers, none for electricity)⁹.

That gap is why EU customers increasingly prefer suppliers that can provide verified actual data — and why the quality of your monitoring matters commercially.

How is the cost calculated?

The importer surrenders CBAM certificates for the embedded emissions, after two reductions¹⁹:

• Free allocation: EU producers of the same goods still receive some free allowances under the EU ETS, and CBAM is reduced in step. The CBAM factor is 97.5% for 2026, falling to 95% in 2027, 90% in 2028, 77.5% in 2029, 51.5% in 2030, 39% in 2031, 26.5% in 2032, 14% in 2033 and zero in 2034. (A July 2026 proposal would slow this to 2038; it has not been adopted¹⁰.)
• Carbon price paid: a carbon price effectively paid in the country of production can be deducted.

The certificate price for 2026 imports is the quarterly average price of EU ETS allowances at auction — €75.36 for the first quarter of 2026, €75.28 for the second and €82.32 for the third — and from 2027 it will be published weekly³.

Will India's carbon market count?

Possibly, but not automatically. The deduction applies only to a carbon price effectively paid, net of any free allocation or compensation. The Commission's draft rules on carbon prices paid in third countries, published in May 2026, would cover carbon taxes and emissions trading systems, including baseline-and-credit schemes, but had not been adopted by October 2026⁷. India's Carbon Credit Trading Scheme is the likeliest candidate, but whether its certificates will reduce CBAM costs — and by how much — is not yet settled⁷.

The EU–India free trade agreement concluded in January 2026 does not exempt Indian goods from CBAM⁸.

What to do now

1. List your EU-bound goods by CN code and the installations that make them.
2. Measure at installation level: fuels, process emissions, electricity and precursors, by product — the same activity data that feed your GHG inventory and BRSR.
3. Write the monitoring plan and choose a verifier accredited for CBAM.
4. Give your importers verified actual emissions before they fall back on default values, and agree how you will share reports.
5. Record any carbon price you pay, with evidence.

How ESGTrack helps

ESGTrack works out embedded emissions per good from your own approved inventory, precursors included, compares actual emissions with the default values, estimates certificate costs to 2034, and prepares a verifier pack and a file for each EU importer — from the same data as your BRSR and GHG inventory. See compliance programmes and carbon accounting.