A parliamentary panel has recommended that the Indian government delay the submission of MSMEs’ Carbon Border Adjustment Mechanism (CBAM) application to the European Union for at least three years.

The move aims to alleviate financial constraints on Indian MSME manufacturers who may not be able to meet CBAM’s demands. The committee has emphasized the need for a robust support mechanism for Indian MSME manufacturers to adapt to CBAM’s requirements.

The committee expressed optimism about achieving a $300 billion target for engineering exports by 2030 but raised concerns about potential obstacles from US and EU tariff and non-tariff barriers.

It must be noted that starting January 1, 2026, EU importers will face a 20-35% tax on steel imports, requiring the declaration and purchase of CBAM certificates to cover emissions.