The European Union's Carbon Border Adjustment Mechanism (CBAM), implemented on January 1, 2026, imposes a carbon tax on imports of carbon-intensive goods, including Indian steel and aluminium. This measure is expected to increase costs for Indian exporters, potentially forcing price cuts of 15-22% and impacting trade. Congress leader Jairam Ramesh criticized CBAM as an unacceptable non-tariff barrier, urging that any upcoming India-EU Free Trade Agreement must address its effects. Exports of steel and aluminium to the EU have already seen a decline in anticipation of the tax.