India’s largest industry lobby and one of its top business schools have put a number on what the EU’s carbon border levy demands from New Delhi: not a carbon market in the abstract, but one that produces an auditable, entity-level record of carbon costs paid. A joint report from the Confederation of Indian Industry (CII) and IIM Ahmedabad, released on August 28, argues that without a credible domestic carbon-pricing framework, Indian exporters of steel, cement, aluminium, fertilisers, refined products and petrochemicals will struggle to remain competitive now that the Carbon Border Adjustment Mechanism has entered its definitive phase, which began on January 1, 2026.
A Carbon Price Only Counts at the Border If You Can Prove It
The report’s sharpest point is about deduction mechanics. Under CBAM rules, a carbon price paid in the country of origin is not automatically subtracted from the border charge. The cost must have been effectively paid and adequately evidenced, with any free allocations or rebates accounted for. For an Indian mill or refinery, that turns carbon pricing into a documentation problem: the value of a domestic carbon price is only as good as the paper trail behind it.
The CII-IIMA prescription follows directly. India needs a well-designed domestic registry, robust monitoring, reporting and verification systems, and a transparent carbon-pricing layer, so that each exporter can generate what the report calls an auditable, entity-level record of carbon costs paid. On emissions data, the report is explicit: facility-level figures should be independently verified, so that every Carbon Credit Certificate represents a genuine and permanent reduction.
What the Report Actually Proposes
Beyond the registry and MRV plumbing, CII-IIMA sketches a market design calibrated to a still-industrialising economy.
First, a price collar. The report asks the government to consider a transparent price-collar methodology to give companies certainty for long-term investment decisions, and examines an illustrative reference range of $22 to $60 per tonne of CO2 equivalent, with $35 used as an example of a price that could be discovered within the band. It stresses these are illustrative policy scenarios, not recommended prices, forecasts or government commitments, and that any collar would be denominated in rupees and tested against domestic abatement costs, industrial competitiveness and affordability.
Second, predictable targets. The report recommends publishing a clear post-2026-27 trajectory for sectoral emissions-intensity targets, with transparent operating rules for any price collar. It warns that loosely set targets would produce an oversupply of carbon certificates, suppressing prices and weakening the incentive to decarbonise.
Third, intensity before caps. The report argues India should keep an emissions-intensity-based baseline-and-credit approach during its rapid industrialisation phase, rather than imposing absolute emissions caps now, with a possible transition to caps as sectors mature and low-carbon technologies spread. The logic: intensity targets let production grow while penalising weak emissions performance and rewarding carbon efficiency.
Fourth, guardrails on offsets. Carbon-market expansion into offsets, the report cautions, needs strong integrity safeguards to stop a flood of low-cost credits from weakening compliance markets and depressing prices.
India Is Not Starting From Zero
The skeleton already exists. India’s Carbon Credit Trading Scheme went live earlier this year, with trading regulations notified by the Central Electricity Regulatory Commission. What the CII-IIMA report adds is the exporter’s perspective: the pieces that matter most under CBAM, evidence quality, verification independence and a discoverable price, are exactly the pieces still under construction. The report’s broader recommendation is an integrated framework linking sustainability definitions, corporate reporting, carbon pricing, financing and implementation.
The Wider Pattern: CBAM Is Building Carbon Markets Outside the EU
The Indian report landed the same week Turkey gazetted the regulation establishing its own emissions trading system, a scheme explicitly designed to shield Turkish exporters from part of the CBAM bill and to keep carbon revenues at home. The direction of travel is consistent: the EU’s border mechanism is doing what years of voluntary-market advocacy could not, pushing large trading partners to build domestic carbon pricing that meets European evidentiary standards. For policymakers in exporting countries, the choice is increasingly between paying the carbon price to Brussels or paying it into their own treasury.
What It Means for Buyers, Exporters and Investors
For EU importers and global buyers sourcing carbon-intensive goods from India, expect embedded-emissions data quality to become a standard procurement variable, because the same evidence that supports a CBAM deduction will be demanded in supply contracts. For Indian exporters, the report reframes domestic carbon costs as a recoverable asset rather than a pure burden, but only if the registry and verification infrastructure delivers audit-grade records. For investors, the illustrative $22 to $60 collar is not a forecast, yet it is the first semi-official bracket for where an Indian compliance price could land, and it anchors the economics of abatement projects in the covered sectors.
What to Watch
Three markers will show whether the report moves policy. First, whether the government publishes the post-2026-27 trajectory for sectoral intensity targets, the single most concrete ask in the document. Second, whether a price-collar methodology appears in official consultations, and at what rupee levels. Third, how India’s registry and verification rules evolve to satisfy CBAM’s effectively-paid-and-evidenced test, because that is where export competitiveness will ultimately be decided.
