Piyush Goyal says the EU’s carbon tax is a “benign disaster”. Today’s news
Berlin: India’s Commerce and Industry Minister Piyush Goyal said on Thursday that the European Union’s (EU) Carbon Border Adjustment Mechanism (CBAM), a tax on carbon-intensive imported goods, was a “benign disaster”.
Speaking at the Berlin Global Dialogue 2026, Goyal said: “If you put CBAM on yourself, put a 50% import duty on steel imports into your country, you are inviting disaster. Your cost of living will go up. Your people will be unhappy. Your industry will be overpriced.”
New Delhi secured commitments from the EU, including a forward-looking most-favoured-nation clause assurance that any flexibility granted to third countries under the CBAM regulations would be extended to India.
In a separate speech at the inauguration of the India Center at the German Council on Foreign Relations (DGAP), Goyal said that the India-European Union (EU) Free Trade Agreement (FTA) can be operational within four to five months. He added that the proposed free trade agreement with the 27-member EU should be signed at the end of the calendar year.
Read also | NIIF plans $600M e-mobility platform Avega: MD & CEO Sanjiv Aggarwal
“It’s going to move very quickly towards signature. And I want to thank all the countries of the European Union. Because this is one agreement, and I invite you to think about the past: did you see how the agreement moved with this willingness,” Goyal said, adding, “the sense of urgency, the mutual commitment to make it happen was really remarkable.”
This development is significant as India and the EU account for a quarter of the world’s gross domestic product and a third of its trade. India and the EU ended talks on a free trade agreement in January 2026, bringing to a close the negotiations that were first launched in 2007, suspended in 2013 and resumed again in 2022.
Tariff reduction
Under the free trade agreement, formally known as the Broad Trade and Investment Agreement, more than 99% of India’s exports by value and 97% of tariff items will get preferential entry into the EU, unlocking opportunities for the country’s micro, small and medium enterprises (MSME) and creating jobs for women, artisans, youth and professionals.
According to the European Commission, the free trade agreement will eliminate or reduce tariffs on more than 96% of EU exports of goods to India, saving European exporters around €4 billion a year in customs duties. The EU has pledged to immediately remove tariffs on around 70.4% of tariff items, covering nearly 90.7% of the value of India’s exports, with another 20.3% of products subject to phase-out and the rest awaiting liberalization through tariff concessions or tariff quotas. Immediate duty-free access to the EU will apply to all textiles, clothing, leather and footwear; 94.4% marine products; and 96.6% gems and jewelry, with chemicals and base metals split between immediate and progressive cuts.
Read also | Avaada Electro files for ₹10,000 crore IPO via confidential route
India has promised immediate duty-free access to around 49.6% of EU tariff items covering 30.6% of trade value, with 39.5% of items covering 63.1% of value under a phase-out over five, seven or 10 years. India’s total supply covers approximately 92.1% of EU tariff items and 97.5% of trade value.
The conclusion of the free trade agreement was jointly announced by Prime Minister Narendra Modi and European Commission President Ursula von der Leyen at the 16th India-EU Summit in New Delhi on 27 January 2026. Trade in goods between India and the EU reached EUR 118.4 billion in 2025, with the bloc importing goods from India to India worth EUR 8.95 billion and EUR 69.5 billion respectively. Total annual bilateral trade in goods and services was worth 180 billion euros.
‘promising future’
“German precision engineering, your Mittelstand (mid-sized companies), commitment to quality with our desire to upgrade India’s infrastructure, our digital capabilities, our young, skilled and talented people, I think together we can shape an exceptional future for this evolving global order,” said Goyal, who is on an official visit to Germany and the Netherlands to deepen strategic economic partnerships, expand bilateral trade cooperation and technology cooperation.
Germany is India’s largest trading partner in the EU. Total Bilateral trade reached $31 billion in FY26, up 4.83% from $29.57 billion in FY25, according to Commerce Department data.
Read also | Coal India plans to invest ₹1 trillion in coal evacuation, gasification
“Our ambition should not stop at Made in India or Made in Germany. We should look at the (goods) we co-create. We should look at becoming a collaborator, becoming competitive for the world. And for that, to make this ambition a reality, we need to connect trade with investment, manufacturing with research and our industries with our academic institutions to really bring FTA to the factories,” he added. Goyal.
Experts say that India and Germany share a special relationship. “Germany is the strongest economy in the EU. We have a special relationship with it. Trade and investment ties are the strongest in the EU. For Germany, the India-EU FTA is extremely interesting,” said Dammu Ravi, India’s former economic relations secretary at the Ministry of External Affairs. He added that Germany’s Mittelstand, or medium-sized enterprises, offer crucial opportunities for Indian SMEs to partner and build global competitiveness.
The writer is in Berlin as a guest of the Confederation of Indian Industry.
