Britain’s proposed Carbon Border Adjustment Mechanism (CBAM) is not included in the FTA with India because London has not yet formally notified the tax.
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free trade agreement between India and the UK does not cover Britain’s proposed Carbon Border Adjustment Mechanism (CBAM). However, officials stated on Friday (July 25) that if such a tax is introduced later, India will have the right to take measures to offset its impact on domestic exports, reported Economic Times.
The CBAM is not included in the agreement because Britain has not yet formally notified the tax. In December 2023, the UK announced plans to implement the CBAM starting in 2027.
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The issue was raised during negotiations for the Comprehensive Economic and Trade Agreement (CETA).
“If it is implemented and negates the trade benefits of India under the agreement, India will have the freedom to rebalance it. We can take counterbalancing measures. This much understanding has been made in the form of note verbale,” an official was quoted as saying by the ET..
A note verbale refers to a diplomatic communication exchanged between two countries.
“There is an understanding that in case the UK make it effective against India in future, then we will also have the right to take counterbalance measures… India can take away the concessions and there will be a mechanism for that,” the official further noted.
India is also engaged in discussions with the European Union, which is planning its own CBAM.
The two parties are negotiating a tra