India exports over $8 billion worth of steel, aluminium, fertilizers, and chemicals to the European Union every year. From January 2026, EU importers of these goods must purchase CBAM certificates equivalent to the carbon embedded in those products — or face penalties. The price of those certificates tracks the EU Emissions Trading System (ETS) carbon price, which has ranged from €50 to €95 per tonne of CO₂ over the past two years.
If you are an Indian manufacturer exporting to Europe, this is not a distant regulatory risk. It is a pricing pressure that your EU customers are now calculating into their sourcing decisions. And the manufacturers who can prove low embedded emissions — with verified data — will have a structural cost advantage over those who cannot.
What CBAM actually is
The Carbon Border Adjustment Mechanism is the EU's tool for ensuring that imports from countries without equivalent carbon pricing are not able to undercut EU producers who are subject to the ETS. The logic is straightforward: if a European steel manufacturer pays €60 per tonne of CO₂ under the ETS, and an Indian manufacturer faces no equivalent carbon cost, the EU manufacturer is at an artificial disadvantage. CBAM levels that playing field by putting a carbon cost on imports.
The transition period ran from October 2023 to December 2025, during which importers only needed to report embedded emissions — no financial obligation. From January 2026, the full mechanism is in force: importers must purchase and surrender CBAM certificates for the embedded emissions in covered goods.
The financial obligation under CBAM does not fall on Indian exporters directly — it falls on EU importers. But EU buyers will pass this cost back through pricing negotiations, sourcing decisions, and, increasingly, explicit carbon price adjustments in contracts. If your embedded emissions are high and unverified, your EU customers will either switch suppliers or demand a price reduction to offset their CBAM cost.
Which Indian exports are affected
| Sector | Products covered | India's EU export value (est.) |
|---|---|---|
| Steel & Iron | Hot-rolled coils, plates, tubes, pipes, fasteners, forgings | ~$2.1B annually |
| Aluminium | Primary aluminium, alloys, unwrought forms, sheets | ~$600M annually |
| Fertilizers | Ammonia, nitric acid, urea, mixed nitrogen fertilizers | ~$400M annually |
| Cement | Clinker, grey and white cement | ~$150M annually |
| Hydrogen | Pure hydrogen and hydrogen-based compounds | Emerging category |
| Electricity | Electric power (limited cross-border relevance for India) | Not applicable |
It is worth noting that CBAM scope is expected to expand beyond these six sectors. Chemicals, polymers, and other energy-intensive products are under active review by the European Commission. If you export goods adjacent to CBAM sectors, it is prudent to begin building your embedded emissions data capability now.
What "embedded emissions" means — and why supplier data is critical
CBAM requires EU importers to declare the total embedded greenhouse gas emissions in the goods they are importing. For a simple product — say, a tonne of aluminium ingot — the embedded emissions are primarily the direct process emissions and electricity consumption at the smelter. But for manufactured goods with complex supply chains — automotive components, industrial machinery parts — the embedded emissions calculation requires upstream supplier data.
This is where the intersection with BRSR Core and Scope 3 emissions becomes directly commercial. A forged steel component exported to a German automotive manufacturer contains embedded emissions from the steel mill, the forge, the heat treatment facility, and potentially the coating process. If you cannot document those emissions with supplier-specific data, the EU importer will be forced to use default EU ETS benchmarks — which are calibrated to the EU's own (relatively low-emission) production standards and will almost certainly overstate your actual embedded emissions, increasing the CBAM cost.
Verified, supplier-specific embedded emissions data is not just a compliance requirement under CBAM. It is a commercial asset. The Indian manufacturers who can demonstrate genuinely low embedded emissions — with audit-ready documentation — will pay lower CBAM costs (via their EU buyer) and will be preferred suppliers as European companies seek to reduce their own supply chain carbon footprint.
What data EU importers will ask you for
Under CBAM Regulation (EU) 2023/956, the embedded emissions that need to be declared include both direct emissions (Scope 1 from the production process itself) and indirect emissions from electricity consumption (a portion of Scope 2). The specific data points your EU buyer will need from you include:
- Total direct process emissions per tonne of product (tCO₂e/tonne)
- Electricity consumption per tonne and the emission factor of the electricity used
- Production volumes and capacity utilisation data for the period
- For complex products: embedded emissions from each significant input material
- Documentation of the emission factor sources used in calculations
This data needs to be verifiable. Your EU importer's CBAM declarant will submit it to their national competent authority, and penalties for incorrect declaration can be severe — up to €50 per tonne of CO₂ that is incorrectly reported, plus reputational consequences for your EU customer relationship.
The three-step response for Indian manufacturers
Step 1: Establish your baseline emissions inventory
Start with your own operations. Calculate your Scope 1 and Scope 2 emissions per unit of output, using India-specific emission factors (CEA 2024 grid factor, relevant fuel emission factors from the Ministry of Environment, Forest and Climate Change). This baseline gives you the core of your CBAM declaration and is also the foundation of your BRSR Core emissions disclosure.
Step 2: Map your supply chain emissions for CBAM-relevant inputs
For your key input materials — steel, aluminium, energy-intensive chemicals — collect supplier-specific emissions data. This means working with your suppliers to gather utility bills, production records, and emission factor data, then running GHG Protocol calculations to arrive at supplier-specific emission intensities. A platform like Emisso can automate this process, handling the data collection, calculation, and audit trail generation across your entire supplier network.
Step 3: Prepare CBAM-format export documentation
Build the capability to generate CBAM-compliant emissions declarations for each shipment to the EU. This means maintaining per-product embedded emissions calculations that are current, verifiable, and traceable to source data. EU importers will increasingly require this documentation as a condition of purchase — and the manufacturers who have it ready will win the contracts.
Emisso and CBAM
Emisso's platform generates CBAM-format emissions exports alongside BRSR Core reports, using the same underlying supplier data. A single data collection effort serves both compliance obligations — reducing the cost and operational burden of CBAM readiness for Indian manufacturing exporters.
Our pilot program, launching March 2026, is working with anchor buyers in the automotive and FMCG sectors across Chennai, Pune, and Bangalore — exactly the clusters with the highest CBAM exposure.
CBAM is not the last carbon trade measure the EU will introduce. It is the first. The manufacturers who build carbon data infrastructure now are not just solving for CBAM 2026 — they are building the capability to navigate whatever comes next. That is the real return on investment.