The United Kingdom has formally recognized India's domestic carbon credit scheme under its Carbon Border Adjustment Mechanism (). This policy decision will shield Indian steel and cement exporters from paying heavy carbon import taxes in the UK.
$8 billion
Indian Exports Shielded Annually
⏳ Time Machine
How today’s news fits into the bigger picture
2023
UK announces CBAM
The UK announced its own Carbon Border Adjustment Mechanism to tax carbon-intensive imports starting in 2027.
Late 2023
India launches CCTS
The Indian government introduced the Carbon Credit Trading Scheme to create a domestic market for carbon compliance.
Mid-2025
FTA talks stall
India-UK Free Trade Agreement negotiations stalled temporarily as both sides clashed over and intellectual property rights.
Today
UK recognizes India's carbon credit trading scheme.
What happens next?
India seeks similar CBAM exemptions from the European Union by mid-2027.
In a major victory for Indian trade policy, the United Kingdom has recognized India's carbon credit trading scheme. Under the UK's upcoming Carbon Border Adjustment Mechanism (CBAM), heavy industries importing goods into the UK must pay a tax corresponding to the carbon emitted during production. By recognizing India's domestic carbon scheme, the UK will allow Indian exporters of high-emission products, such as steel, iron, and cement, to offset their UK tax liabilities using carbon credits bought and earned right here in India. This prevents double taxation and ensures Indian industrial products remain highly price-competitive in European markets. It also establishes India’s regulatory credibility, demonstrating that its domestic green compliance standards meet the rigorous benchmarks set by major Western economies.
💭 If you're wondering…
It is a green border tariff imposed by countries like the UK on carbon-intensive imports to prevent domestic companies from being undercut by foreign competitors with weaker climate laws.
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Official sources
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