India seeks more UK talks on carbon tax rules before 1 January

India will seek further talks with the UK on how Britain's carbon border tax will be implemented, with the levy due to start on 1 January 2027, BusinessLine reported on 28 October¹.

The tax, the Carbon Border Adjustment Mechanism (CBAM), charges for the emissions embedded in imports of aluminium, cement, fertiliser, hydrogen, iron and steel¹. The UK government says it takes effect on 1 January 2027 and will "tax embodied emissions in specific carbon intensive goods imported into the UK"².

The duty falls on the UK importer

The legal obligation sits with the business importing the goods, not with the Indian mill. Importers of CBAM goods must keep records, may need to register, and should consider monitoring, reporting and verifying their embodied emissions, according to the government's CBAM collection page². Registration will open on 1 January 2028, the page says². Importers who fall outside the tax still have to keep records to prove they are not liable².

That pushes the data work back to the producer. Under the EU's parallel scheme, exporters give embedded emissions data to their EU customers, and the EU importer buys and surrenders the certificates³.

India's ask, and the UK's answer

New Delhi wants parallel talks on the regulations and on how they will be applied once the legislation is final, an official told BusinessLine¹. India argued for flexibilities for its industry in return for the free trade agreement, implemented in July, but the UK refused, according to the report¹. A source close to developments in the UK said London has held consultations with India and is open to more. But the UK is "not inclined to exempt India or any other FTA partner from the carbon levy", the source said¹. That position comes from people cited by the newspaper, not from a published UK decision¹.

How the carbon credit relief works

The UK has recognised India's Carbon Credit Trading Scheme as a qualifying scheme, so a UK importer can claim relief where an Indian producer has already paid a verified carbon price¹. It is not an automatic exemption. "Indian producers would need to establish the relevant emissions data and demonstrate that the carbon price qualifies for relief under the UK system," an industry source said¹. Any difference between the recognised carbon price and the UK charge would remain payable, the source said¹.

The UK's own guidance says Carbon Price Relief is available where goods meet certain conditions². India's scheme is being developed by the Bureau of Energy Efficiency and was legislated in 2022; a summary of it describes compliance as voluntary and credits as intended for the domestic market⁴.

What is still unknown

The UK published an updated policy summary and technical guidance on 16 October 2026¹. Final default rates, supporting legal notices and some operational guidance are still outstanding or subject to revision, according to the report¹. Two inputs matter for pricing. One is the default emission values used where a producer cannot supply verified data. The other is the methodology for calculating and verifying the effective carbon price already paid¹. London has said both will be published before the tax starts¹. Until then, the charge on a tonne of Indian steel or aluminium cannot be fixed.

Selling into Europe as well

The EU began charging for imports under its own CBAM at the start of 2026, across six sectors including electricity³. EU rules have required real emissions data since July 2024, with default values allowed for only about 20% of emissions³. In June 2026, member states agreed to extend the mechanism to about 180 downstream products from 2028³. A summary of the UK scheme says it covers more indirect emissions than the EU, including heat, steam and cooling as well as electricity⁵. Exporters selling into both markets face two sets of paperwork, but the plant-level data behind them is of the same kind.

What to check now

• Confirm which of your products are CBAM goods in the five sectors, and their tariff codes, using the UK guidance².
• Ask your UK buyer whether it will register and who bears the charge in your contract, since the liability sits with the importer².
• Collect plant-level figures for direct emissions and for electricity, heat, steam and cooling^2, 5.
• Decide who will verify the data, and keep the audit trail ready, because the verification methodology is not final¹.
• Gather the CCTS records that would support a Carbon Price Relief claim, since relief is not automatic¹.

What happens next

India has formally reserved the right to rebalance concessions or impose retaliatory duties if the UK's 2027 carbon tax materially damages Indian metal and engineering exports, Indian officials have said¹. GTRI estimates that $775 million of Indian exports may be affected¹. The immediate marker is the UK's publication of default values and legal notices, promised before 1 January¹.