Q.3) What will be the implications of the carbon border adjustment mechanism (CBAM) introduced by the EU for Indian industries? What steps Indian industries can take to mitigate the impact? (10 Marks)

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Swatantra

“Mentor’s Comments”

https://indianexpress.com/article/opinion/columns/eu-ghg-emissions-law-indian-industry-7421960/
In the intro, give a brief introduction of Fit for 55 legislation.
In the body, mention that India’s goods trade with the US was $ 74 billion in 2020, the CBAM will have implications for energy-intensive industries in India that export to the EU, also mention that India lacks any carbon tax or cap of its own. In the steps suggest clean technology partnership with the European industries, investment in renewable energy, diversification of export markets etc.
Conclude by mentioning that the CBAM may seem obstructionist. But over the long-term, it can provide regulatory certainty to industry by harmonising carbon prices

Comments

6 responses to “Q.3) What will be the implications of the carbon border adjustment mechanism (CBAM) introduced by the EU for Indian industries? What steps Indian industries can take to mitigate the impact? (10 Marks)”

July 27, 2021

Utkarsha Yadav

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1. August 1, 2021
  
  Swatantra
  
  Utkarsha
  
  Introduction is fine but after that mention what do you understand by CBAM. By introducing Fit for 55, the EU will bring more sectors into this trading scheme and tighten its allocation of permits. The EU’s carbon price is likely to go up as a result, making its domestic products more expensive than imports from countries that do not have such rules. Hence, to level the playing field between domestic and imported products, CBAM has been introduced for products from countries outside EU.
  
  Impact of CBAM is fine, points 1 and 4 can be combined. Rest of the answer is good. You have covered the points, conclusion is fine too.
  
  Keep practicing. 🙂
July 28, 2021

Murari Jha

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1. August 2, 2021
  
  Swatantra
  
  Murari
  
  Introduction is fine but you can frame it better, first mention Fit For 55 and then mention that since it will bring more sectors into this trading scheme and tighten allocation of permits, the EU’s carbon price is likely to go up and as a result make its domestic products more expensive than imports from countries that do not have such rules- hence CBAM for such countries.
  
  Effect part is fine, you can mention some data related to loss in exports – India will lose $1-1.7 billion in exports of energy-intensive products such as steel and aluminium — India’s goods trade with the EU was $74 billion in 2020.
  In way forward, you can talk of expanding PAT scheme also. Rest of the points are fine, conclusion is fine too.
  
  Keep practicing. 🙂
  
  4.5/10
July 29, 2021

ankita thakur

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1. August 2, 2021
  
  Swatantra
  
  Ankita
  
  First mention about Fit For 55 that EU has planned to impose for its domestic industries. Then explain the logic behind CBAM- By introducing Fit for 55, the EU will bring more sectors into this trading scheme and tighten its allocation of permits. The EU’s carbon price is likely to go up as a result, making its domestic products more expensive than imports from countries that do not have such rules. Hence, to level the playing field between domestic and imported products, CBAM has been introduced for products from countries outside EU.
  
  In effects on India mention some data related to exports- India will lose $1-1.7 billion in exports of energy-intensive products such as steel and aluminium — India’s goods trade with the EU was $74 billion in 2020.
  
  Write way forward specific to this issue- India should enter clean technology partnerships with European industry; Indian companies should invest in more renewable electricity and energy efficiency(expand PAT scheme); India can try to diversify its exports to other markets and products.
  
  CBAM might prove to be good for environment, take a balanced stand in the conclusion. The Fit for 55 initiative will be for industries in EU only.
  
  Read more about the topic, you have digressed from the topic in the answer.
  
  Keep practicing. 🙂