The India-EU free trade agreement includes a separate annexure dedicated to CBAM, Darpan Jain, Additional Secretary in India's Department of Commerce, told the IGCC Industry Dialogue in New Delhi on July 30, 2026, as reported by Deccan Chronicle. "There is a separate Annexure on dealing with CBAM, and there are certain pillars," Jain said. It is the most concrete official description yet of the CBAM architecture inside the trade deal, and it confirms the shape of the outcome: India gets no exemption from the EU's carbon border mechanism, but a work plan of accommodations instead. Future EU flexibility on CBAM flows to India, Indian verifiers are to be recognized, and India's own carbon pricing is to be credited when CBAM obligations are calculated.
The timing gives the remarks extra weight. Jain spoke one day before India's first hard compliance deadline under its Carbon Credit Trading Scheme (CCTS), scheduled for July 31, 2026, and ten days after India accelerated its CBAM response with draft steel targets and a ministerial push in Brussels. For Indian exporters of steel, aluminium, cement, and fertilizers, and for the EU importers who buy from them, the annexure defines the channel through which the landed cost of Indian goods in the EU will be negotiated for years.
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What the CBAM annexure contains
The CBAM annexure in the India-EU FTA is built around multiple pillars, according to Jain's description: any future EU flexibility on CBAM becomes available to India, Indian verifiers gain EU recognition, and India's own carbon pricing is credited against CBAM obligations. On the flexibility pillar, Jain framed the pass-through as an obligation: "in case of flexibility in future, that will be available to India. So there is an obligation in that." On the smallest exporters, he said "I am very hopeful that SMEs will not face any problem," pointing to provisions on compliance verification and embedded emissions calculation for small and medium enterprises.
Deccan Chronicle reports the FTA is expected to be signed later in 2026 and may enter into force in 2027, which would make the annexure operative during the first CBAM declaration cycle. The table below maps each pillar to the condition that must be met before it delivers value.
| Annexure pillar | What it promises | What has to happen first |
|---|---|---|
| Flexibility pass-through | Any CBAM flexibility the EU grants in future "will be available to India" | The EU grants flexibility to anyone; the Ukraine exemption debate is the live test case |
| Verifier recognition | EU acceptance of Indian accredited verification agencies | The EU verifier framework goes live; registry registration opens September 1, 2026 |
| Carbon price crediting | India's carbon pricing counts against CBAM certificate obligations | The CCTS must qualify as a carbon price under Article 9 rules that exist only in draft |
No exemption, but the flexibility pass-through has a live test case
India secured no CBAM exemption in the FTA; the annexure instead obliges the EU to extend to India any flexibility it grants on CBAM in the future. The clause works like most-favoured treatment for carbon border accommodations: every concession the EU makes to another trading partner becomes a potential Indian entitlement. The test case surfaced one day before Jain spoke, when Pascal Lamy's call for a Ukraine CBAM exemption tied to decarbonisation milestones was reported across trade media. If a concession of that type is ever adopted, the annexure gives India a treaty basis to claim equivalent treatment.
The pass-through also reframes India's position in the wider argument over CBAM and developing countries, where it formally opposes the mechanism as inconsistent with common but differentiated responsibilities: rather than waiting for that multilateral debate to resolve, India banked a bilateral mechanism that captures whatever flexibility the debate eventually produces.
Verifier recognition runs into a September 1 calendar
EU recognition of Indian accredited verification agencies, the second pillar, would spare Indian producers the cost of parallel verification chains built solely to serve the EU market. Regulation (EU) 2023/956 requires embedded emissions declared as actual values to be verified by accredited verifiers, and the EU side of that infrastructure is only now assembling: verifier registry registration opens September 1, 2026, with first accreditations still pending. India continues to negotiate with both the EU and the UK on acceptance of Indian accredited verification agencies alongside recognition of the CCTS itself.
Preparation pays off under either outcome: verified emissions data lets EU customers declare actual values instead of default values, so building capability for CBAM verification as a non-EU producer reduces cost whichever flag the verifier flies.
One legal analysis questions the crediting pillar
The crediting pillar assumes the CCTS can function as a carbon price under Article 9 of Regulation (EU) 2023/956, and one legal analysis argues the Commission's draft rules point the other way. Writing for LiveLaw, Parul Shukla, Assistant Professor of Law at Marwadi University, and Bijendra Shandilya, a final-year law student at IIM Rohtak, argue that the Commission's draft Article 9 implementing rules, published in May 2026, recognize only "a binding tax, levy, fee or emissions trading system" as a carbon price, a category they say the CCTS's intensity-based, credit-and-shortfall design sits outside.
Their reasoning turns on who actually pays. A CCTS entity that meets its emissions-intensity target pays nothing domestically, so there is no monetary amount for an EU importer to deduct. An entity that misses its target buys credits only for the shortfall, not for its full embedded emissions, which does not map onto the CBAM carbon price deduction methodology. The authors also flag that the CCTS lacks a designated forum for technical measurement disputes, which they argue would weaken India's position in an EU equivalency review.
That is one reading of a draft, not a settled outcome. Member states are due to vote in September on which foreign carbon prices count, and the annexure gives India a standing treaty channel to contest an exclusion. For EU importers of Indian goods, the operational position is unchanged: no deduction is claimable today, so budget full certificate liability for 2026 imports and treat the Article 9 deduction as upside, not baseline.
The CCTS faced its first hard deadline one day later
India's first binding CCTS compliance event was scheduled for July 31, 2026, one day after Jain spoke: obligated entities had to file Form A with verified FY2025-26 emissions data, a calendar milestone documented by the International Carbon Action Partnership (ICAP). No dedicated news coverage has confirmed the outcome of the filing round; the date stands as the scheduled deadline. The obligated universe spans roughly 490 to 740 entities across the notified sectors depending on the count, with ICAP putting the figure at approximately 490 across the seven sectors notified so far.
The seven sectors under notified compliance targets are listed below; the first four were notified in October 2025, the remaining three in January 2026:
- Aluminium (also a CBAM sector)
- Cement (also a CBAM sector)
- Chlor-alkali
- Pulp and paper
- Petroleum refining
- Petrochemicals
- Textiles
Targets for iron and steel and for fertilizers, the two pending sectors with the largest CBAM overlap, are not yet notified; draft steel targets entered public consultation in early July. Compliance runs against a FY2023-24 baseline through the Indian Carbon Market Portal, launched March 21, 2026, and the filings feed the market's next stage: trading of Carbon Credit Certificates on India's power exchanges, expected around October 2026. A traded CCC price matters directly to the crediting pillar, because a documented domestic carbon cost is the raw material of any Article 9 claim.
What happens next
Four dates now drive the India-CBAM file: verifier registry registration on September 1, 2026, the September member state vote on the draft carbon price deduction rules, the expected start of CCC trading around October 2026, and the FTA signature Deccan Chronicle reports is expected later in 2026 ahead of possible entry into force in 2027. Each one tests a different pillar of the annexure Jain described.
The cost stakes remain modest in 2026 and grow from there. At the 2.5 percent CBAM factor and the Q2 2026 certificate price of €75.28/tCO₂e, the certificate cost on a tonne of blast furnace steel comes to under €4, a figure that rises each year as EU free allocation phases out. The CBAM cost calculator models the full liability at current prices, and the exposure picture by producer and product is covered in the CBAM India country guide.