EU Carbon Tax and Regulations Could Harm European Business Growth, Warns Indian Minister Piyush Goyal

India is negotiating a free trade agreement with the EU.

Berlin/New Delhi:

Commerce and Industry Minister Piyush Goyal stated on Friday that various regulations, including the Carbon Tax, implemented by the European Union are anticipated to negatively affect its business operations.

India has strongly objected to EU regulations such as the Carbon Border Adjustment Mechanism (CBAM) and EU Deforestation Regulation (EUDR).

"Because of all these regulations, I suspect that Europe is going to have an existential problem for their businesses. Their infrastructure is going to get costlier. Automobiles and planes are going to get costlier," Goyal remarked at the Berlin Global Dialogue.

"Their cost of living will be difficult to manage and they will be living in a cocoon, while other trading partners will be trading around the world with each other," he continued.

The minister visited Berlin to participate in the dialogue, which brings together leaders and German businesses to explore ways to enhance bilateral trade and investments.

Goyal pointed out that there are 73 EU regulations currently in place.

He emphasized that meeting the paperwork requirements to comply with these regulations is virtually impossible.

"They (EU) are seeking to hyphenate too many issues. Trade is about trade, why are we hyphenating too many issues with trade, we are actually messing up the free trade," he added.

India is currently negotiating a free trade agreement with the EU.

Under CBAM, Indian exports of steel, aluminum, and cement to the EU could potentially face tariffs of 20-35 percent.

According to a report by think tank GTRI, India's exports of products like coffee, leather hides, and paperboard, worth USD 1.3 billion annually to the European Union, will be impacted due to the deforestation regulation adopted by the EU.