Even as India and the United Kingdom move closer to finalizing a free trade agreement (FTA), senior officials from India’s Ministry of Commerce clarified on May 8 that India has firmly communicated its right to retaliate if the UK introduces a carbon border adjustment mechanism (CBAM).
“Both countries have agreed that should the UK introduce CBAM, India reserves the right to retaliate. This understanding is part of the negotiation framework, and the two nations will exchange formal letters to that effect,” a senior official confirmed.
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A second official noted that Indian industries are more concerned about the administrative burden and additional paperwork CBAM might bring, rather than actual disruptions to trade. “CBAM won’t necessarily block market access for Indian exporters. Moreover, there could be mechanisms where goods are taxed within India before being shipped to the UK, which might help avoid CBAM altogether,” the official explained.
On May 6, Commerce Minister Piyush Goyal had already signaled India’s stance, stating that India is prepared to retaliate against the European Union’s CBAM and would take a similar approach toward the UK if it introduced such measures. Speaking at the Columbia India Energy Dialogue 2025, Goyal emphasized, “It would be unwise to impose taxes on friendly countries like India. We hope that better judgment will prevail among our friends.