Commerce and Industry Minister Piyush Goyal has cautioned the European Union that its carbon tax on steel imports and a growing list of regulations could raise costs for businesses and consumers, stoke inflation and erode the bloc's global competitiveness.
Speaking at the Berlin Global Dialogue on October 22, Goyal said the EU risked hurting its own industries by imposing additional trade restrictions and compliance requirements, including the Carbon Border Adjustment Mechanism (CBAM). He pointed out that higher costs for steel and other industrial materials could undermine Europe's economic interests.
Goyal described the EU's approach as counterproductive, warning that the cumulative burden of regulations could hurt European industries while creating non-tariff barriers for trading partners.
Also read | ArcelorMittal & SA's IDC close in on $610 m deal
The minister pointed to the implications for infrastructure development, saying higher costs for steel, aluminium and cement would affect projects ranging from ports and airports to highways, utilities and water pipelines. He said the impact would be compounded by CBAM and deforestation-related requirements.
Goyal said the EU had accumulated around 75-77 regulations, arguing that repeated additions were increasing the compliance burden on businesses and making them less competitive in global markets.
He also cautioned that countries could respond to restrictions imposed on their businesses with regulations of their own, potentially hurting European companies. In his view, the resulting increase in costs could push up inflation and make it harder for European industries to compete internationally.
The minister cited Germany's automobile sector as an example, saying car sales in the country had declined by 15-20% over roughly the past decade. He warned that further cost increases could put more pressure on the industry's ability to compete.
Goyal said India was focusing on improving its competitiveness while building mutually beneficial trade relationships with partner countries. He described India's trade agreements as fair, equitable and balanced, adding that the country was developing complementary economic strengths with its partners.
Also read | Welspun Corp’s $350 million US bet rides rising oil, gas pipeline demand
He also pointed to Singapore as an example of a trading partner without CBAM and deforestation-related requirements.
India has repeatedly raised concerns about the European Union's regulatory framework. Under CBAM, Indian exports of steel, aluminium and cement to the EU could face tariffs of 20-35%.
The EU's anti-deforestation regulation (EUDR) imposes compliance requirements on products linked to deforestation. The rules affect sectors including rubber, creating additional obligations for producers and exporters seeking access to European markets.
Goyal also highlighted India's relatively small contribution to global carbon emissions, saying the country accounts for 3-3.5% of the total while supporting 17% of the world's population.