The European Union is set to extend its carbon border regime to cover approximately 180 more products by 2028, posing significant challenges for Indian exporters, especially MSMEs reliant on high-emission energy sources and downstream manufacturing sectors.
Indian exporters of steel, aluminium and a wide range of fabricated goods are facing a new round of pressure from Brussels, with the European Union moving to widen its carbon border regime to cover about 180 additional products by 2028.
The expansion would push the EU’s Carbon Border Adjustment Mechanism deeper into manufacturing supply chains, extending its reach far beyond primary metals and into downstream items such as engineering goods, auto components, machinery and fabricated metal products. For Indian suppliers, that matters because Europe is a major destination for these exports and the policy could alter competitiveness across multiple layers of the industrial base.
Micro, small and medium-sized enterprises are likely to bear the sharpest impact. In India, MSMEs account for roughly a third of downstream steel exports, and industry representatives say many of these firms rely heavily on grid electricity generated largely from coal-based thermal power stations. Anil Bhardwaj, secretary general of the Federation of Indian Micro and Small & Medium Enterprises, said the proposal was “a very serious challenge” for smaller firms and argued that access to green power would be essential if they are to remain viable under the new rules.
The concern is not limited to energy intensity alone. According to an analysis by Geneva-based trade consultancy TULIP Consulting, the draft EU approach would bring MSMEs within the CBAM framework for a broader set of downstream products. Colette van der Ven, the firm’s founder, said flat steel products make up 44% of India’s exports, but are mainly produced by integrated steelmakers, while about one-third of downstream steel products are made by MSMEs.
CBAM, which came into force for covered heavy industrial goods on 1 January 2026, is designed to impose a carbon price on imports to reflect emissions embedded in production outside the EU. The policy is intended to reduce the risk of carbon leakage, whereby production shifts to jurisdictions with looser climate rules, and to support the EU’s own decarbonisation drive. The OECD says the mechanism is also linked to the gradual removal of free allowances for some carbon-intensive sectors within the bloc.
What is now under discussion would go further. Reports from the European Parliament’s environment committee indicate that lawmakers want indirect emissions, particularly those associated with electricity use, brought into scope across more sectors, while also rejecting international carbon credits as a route to compliance. That would raise the stakes for producers in countries where power remains carbon-heavy, including much of industrial India.
Trade analysts say the consequences could extend well beyond steel and aluminium. The Global Trade Research Initiative argues that most Indian engineering goods, auto parts, machinery and fabricated metal exports to the EU would be affected if the proposed expansion proceeds. Even producers that have built a carbon advantage through scrap-based steel and recycled aluminium could find that edge eroded if Brussels tightens emissions accounting.
For India’s industrial exporters, the message is increasingly clear: the EU’s climate policy is no longer just a primary metals issue. It is becoming a supply-chain-wide trade filter, with MSMEs, captive-power shortfalls and electricity emissions now central to the competitiveness debate.
- https://www.businesstoday.in/industry/story/fresh-export-challenge-for-msmes-eu-plans-to-expand-carbon-tax-to-180-more-steel-aluminium-products-526508-2026-04-20?utm_source=rssfeed – Please view link – unable to able to access data
- https://www.financialexpress.com/policy/economy/eu-examines-expansion-of-cbam-to-180-more-items/4209778/ – The European Union is considering expanding its Carbon Border Adjustment Mechanism (CBAM) to include 180 additional steel and aluminium products by January 2028. This expansion aims to address carbon leakage by imposing carbon taxes on a broader range of imports, potentially affecting industries in countries like India that rely on coal-based power for production. The proposal has been discussed within the European Parliament’s Committee on the Environment, Climate and Food Safety, which has recommended extending CBAM to account for indirect carbon emissions and rejecting the use of international carbon credits for compliance.
- https://www.oecd.org/en/blogs/2025/03/eu-carbon-border-adjustment-mechanism-what-is-it-how-does-it-work-and-what-are-the-effects.html – The Organisation for Economic Co-operation and Development (OECD) provides an overview of the European Union’s Carbon Border Adjustment Mechanism (CBAM), which aims to prevent carbon leakage by aligning the carbon costs of foreign producers with those of EU producers within the EU market. The CBAM is designed to stem carbon leakage to countries without a carbon price and also permits the EU to stop giving free allowances to some carbon-intensive sectors within its borders, thereby hastening decarbonisation.
- https://www.euronews.com/my-europe/2026/01/01/eus-carbon-border-tax-on-heavy-industry-goods-goes-into-effect-risking-trade-escalation – As of January 1, 2026, the European Union’s Carbon Border Adjustment Mechanism (CBAM) has come into effect, imposing carbon taxes on imports of steel, aluminium, cement, and other heavy goods. This measure aims to protect EU manufacturers facing more stringent obligations compared to foreign peers. However, critics have accused the EU’s law of ‘protectionism’ and warn that it could lead to trade frictions and disputes with non-EU countries, potentially escalating existing trade tensions.
- https://www.oecd.org/en/blogs/2025/03/eu-carbon-border-adjustment-mechanism-what-is-it-how-does-it-work-and-what-are-the-effects.html – The Organisation for Economic Co-operation and Development (OECD) provides an overview of the European Union’s Carbon Border Adjustment Mechanism (CBAM), which aims to prevent carbon leakage by aligning the carbon costs of foreign producers with those of EU producers within the EU market. The CBAM is designed to stem carbon leakage to countries without a carbon price and also permits the EU to stop giving free allowances to some carbon-intensive sectors within its borders, thereby hastening decarbonisation.
- https://www.europarl.europa.eu/thinktank/en/document/EPRS_BRI%282022%29698889 – The European Parliament’s briefing on the EU’s Carbon Border Adjustment Mechanism (CBAM) discusses its implications for climate and competitiveness. The CBAM is designed to address carbon leakage by imposing carbon costs on imports of certain goods, including cement, iron and steel, aluminium, fertilisers, and electricity. The briefing highlights the potential impact of CBAM on global trade and the need for careful consideration of its design to ensure it effectively addresses environmental concerns without causing undue trade disruptions.
- https://www.oecd.org/en/blogs/2025/03/eu-carbon-border-adjustment-mechanism-what-is-it-how-does-it-work-and-what-are-the-effects.html – The Organisation for Economic Co-operation and Development (OECD) provides an overview of the European Union’s Carbon Border Adjustment Mechanism (CBAM), which aims to prevent carbon leakage by aligning the carbon costs of foreign producers with those of EU producers within the EU market. The CBAM is designed to stem carbon leakage to countries without a carbon price and also permits the EU to stop giving free allowances to some carbon-intensive sectors within its borders, thereby hastening decarbonisation.
Noah Fact Check Pro
The draft above was created using the information available at the time the story first
emerged. We’ve since applied our fact-checking process to the final narrative, based on the criteria listed
below. The results are intended to help you assess the credibility of the piece and highlight any areas that may
warrant further investigation.
Freshness check
Score:
7
Notes:
The article reports on the European Union’s plan to expand its Carbon Border Adjustment Mechanism (CBAM) to include 180 additional steel and aluminium-based products by 2028. This proposal was first reported on April 16, 2026, by the Financial Express. ([financialexpress.com](https://www.financialexpress.com/policy/economy/eu-examines-expansion-of-cbam-to-180-more-items/4209778/?utm_source=openai)) The Business Today article was published on April 20, 2026, indicating a freshness of four days. The content appears original, with no evidence of being republished across low-quality sites or clickbait networks. However, the article relies on a press release from the European Commission dated December 17, 2025, which announced the expansion of CBAM to include specific steel and aluminium-intensive downstream products starting January 1, 2028. ([taxation-customs.ec.europa.eu](https://taxation-customs.ec.europa.eu/news/commission-strengthens-carbon-border-adjustment-mechanism-2025-12-17_en?utm_source=openai)) This reliance on a press release warrants a moderate freshness score, as the information has been available since December 2025.
Quotes check
Score:
6
Notes:
The article includes a direct quote from Anil Bhardwaj, Secretary General of the Federation of Indian Micro and Small & Medium Enterprises (FISME), stating that the EU’s proposal is ‘a very serious challenge’ for MSMEs. This quote is also present in the Financial Express article published on April 16, 2026. ([financialexpress.com](https://www.financialexpress.com/policy/economy/eu-examines-expansion-of-cbam-to-180-more-items/4209778/?utm_source=openai)) The wording matches exactly, suggesting potential reuse of content. Additionally, the article references an analysis by TULIP Consulting, a Geneva-based trade consultancy, but does not provide a direct quote or link to the original analysis, making independent verification challenging. The lack of verifiable quotes and reliance on unverified analyses raise concerns about the article’s credibility.
Source reliability
Score:
6
Notes:
The article is published by Business Today, an Indian news outlet. While Business Today is a reputable source within India, it is not as widely recognised internationally. The article cites a press release from the European Commission dated December 17, 2025, which is a primary source. However, the article also references analyses from TULIP Consulting and statements from Anil Bhardwaj without providing direct links or verifiable sources, which diminishes the overall reliability of the information presented.
Plausibility check
Score:
7
Notes:
The article discusses the European Union’s plan to expand its Carbon Border Adjustment Mechanism (CBAM) to include 180 additional steel and aluminium-based products by 2028. This proposal aligns with the European Commission’s announcement on December 17, 2025, to strengthen CBAM by including specific steel and aluminium-intensive downstream products starting January 1, 2028. ([taxation-customs.ec.europa.eu](https://taxation-customs.ec.europa.eu/news/commission-strengthens-carbon-border-adjustment-mechanism-2025-12-17_en?utm_source=openai)) The concerns raised about the impact on Indian MSMEs are plausible, given that MSMEs account for roughly a third of downstream steel exports from India. However, the article lacks specific details or data to support these claims, which diminishes its overall credibility.
Overall assessment
Verdict (FAIL, OPEN, PASS): FAIL
Confidence (LOW, MEDIUM, HIGH): MEDIUM
Summary:
The article discusses the European Union’s plan to expand its Carbon Border Adjustment Mechanism (CBAM) to include 180 additional steel and aluminium-based products by 2028. While the proposal aligns with the European Commission’s announcement on December 17, 2025, the article relies heavily on a press release from the European Commission and includes direct quotes and analyses without providing verifiable sources or links. The lack of independent verification for these analyses and statements raises concerns about the article’s credibility. Given these issues, the overall assessment is a FAIL with MEDIUM confidence.