Navigating CBAM: India’s heavy industries gear up for smart, data-driven compliance

Which sectors within India are likely to experience the greatest challenges as a result of the EU’s CBAM?

Ans- India’s heavy industries and related manufacturing sectors face the sharpest challenges under CBAM. In particular, industries exporting large volumes of steel, aluminum and cement to the EU are most exposed. India is explicitly named among the EU’s top five affected trading partners because of its big steel, aluminum and cement exports. Downstream sectors that depend on carbon-intensive materials, such as the automotive, construction, and machinery industries, will also feel indirect effects, including higher input costs and the need for supply chain adjustments. These industries may not be directly subject to CBAM yet, but they face indirect risks through supplier pricing and sourcing strategies.

To remain competitive and compliant, companies in these sectors will need to:

• Improve emissions transparency across their value chains
• Engage with suppliers to collect emissions data
• Explore lower-carbon alternatives and production methods
• Consider long-term shifts in sourcing or investment in clean technologies

In short, any sector with a strong reliance on steel, cement, or aluminum whether for direct export or as key inputs, will encounter heightened compliance burdens, cost pressures, and growing scrutiny as CBAM evolves beyond the transitional phase.

How is the introduction of CBAM expected to influence India’s GDP and urban consumers, and which market verticals will be most affected?

CBAM’s direct economic impact will be concentrated in a few sectors and thus modest in overall GDP terms. Kuehne+Nagel analysis shows that the mechanism could increase the cost of Indian steel exports to the EU by approximately 15 per cent in 2026, rising to 51 per cent by 2034. Aluminium exports may face increases between 6 per cent and 17 per centover the same period

These rising export costs may dampen output and profits in those industries, which in turn could slightly slow growth in those segments. However, because CBAM currently covers only six commodities, its drag on India’s large, diverse economy is expected to be relatively limited.

Urban consumers would feel CBAM’s effects only indirectly. If steel, cement or aluminium becomes noticeably more expensive, cost increases could eventually filter into products and services in cities for example, higher input costs in construction (affecting housing and infrastructure) or in automobile manufacturing (affecting vehicle prices). But consumer-facing sectors like electronics, agriculture or basic services are outside CBAM’s current scope. In essence, the market verticals most affected will be those tied to heavy industry: steel and aluminum production themselves, and downstream sectors like automotive, construction and industrial manufacturing that use those materials. Other urban market segments (food, textiles, services, etc.) are much less directly impacted by CBAM.

What has been the response from Indian businesses, and how are major EU trading partners reacting to the new mechanism? What themes are dominating the global conversation around CBAM at present?

Indian businesses: Awareness of CBAM is growing, but preparedness remains uneven. Larger exporters especially in steel, aluminium and cement, are beginning to pilot emissions-tracking and reporting tools, often in collaboration with EU customers or specialized climate-compliance providers At Kuehne+Nagel, we have observed several Indian manufacturers already adopting our Climease digital solution to gather, verify, and structure product-level carbon data in anticipation of CBAM requirements. At the same time, many Indian firms still struggle with basic data collection and rely on manual spreadsheets, or unverified figures, defaulting to EU-provided generic emissions values. In short, we see Indian companies starting to invest in digital reporting systems, but a large portion of exporters have yet to build the internal processes needed for CBAM compliance to meet upcoming deadlines.

Other trading partners: The EU’s biggest exposed partners India, China, Türkiye and Ukraine – are reacting by assessing CBAM’s trade costs. These countries, which account for the bulk of carbon-intensive exports to Europe, face similar challenges in filling the carbon-cost gap. By contrast, nations with stringent domestic carbon rules (like Switzerland or the US) are less directly hit by CBAM. In practice, affected exporters globally are at various stages of engagement: some are working on compliance solutions and lobbying for workable transition periods, while others are still grappling with basic data issues.

Global conversation themes: The dominant themes worldwide are carbon transparency in trade, supply-chain decarbonization, and fairness of carbon pricing. Stakeholders note that CBAM is forcing companies to treat carbon intensity as a sourcing criterion – importers are starting to favor suppliers with greener energy mixes or robust carbon accounting. Deeper data partnerships between suppliers and buyers are being emphasized, as is the need for verified, product-level emissions reporting. We are also seeing discussion of CBAM-like schemes spreading (for instance, the UK and Norway plan similar border adjustments), pointing to a broader shift toward “carbon-accountable trade”. Other frequent topics include the need for clear rules on monitoring/reporting, the role of default vs. actual emissions values, and how developing countries can be supported or compensated (for example through aid for clean technology or transitional arrangements). Overall, the conversation is centered on making global trade carbon-neutral while maintaining competitiveness and equity in international markets.

What steps need to be taken by businesses in vulnerable countries to safeguard their products? In countries that lack scalable and sustainable technology, what can be the way out of this policy?

Businesses in exposed (vulnerable) countries must move aggressively to gather and report accurate emissions data and to reduce their product carbon intensity. Key steps include:

• Adopt digital emissions tracking tools: Companies should implement product-level carbon accounting systems to avoid reliance on default EU emissions values, which are often overestimated and financially punitive. At Kuehne+Nagel, for example, we support exporters with our Climease digital platform, which automates supplier data collection, verification, and reporting in a CBAM-compliant format across languages and formats. Our dedicated team engages directly with suppliers in their local language, guiding them through each step of the emissions calculation. Because we’ve simplified the process, no technical background is needed, making accurate reporting accessible even for small or less specialized producers.
• Collaborate with EU importers: Exporters need to work closely with their European buyers to share verified emissions data for each shipment. Open communication is essential, since providing real data (even approximate) will reduce the CBAM levy compared to unverified defaults.
• Invest in lower-carbon production: Beginning in 2026, CBAM certificates will apply only to direct emissions from the production process, not those from electricity use. Therefore, reducing emissions from chemical reactions, fuel combustion, and similar direct sources will directly lower CBAM costs. Businesses should improve energy efficiency, adopt cleaner technologies, and explore alternative materials with lower process emissions. Strategic partnerships with international buyers, such as co-investing in lower-emission production lines, can enhance compliance and competitiveness in the EU market.

In regions lacking advanced green technology, the “way out” is to focus on transparency and efficiency. Even without the very latest technology, firms can use basic audits, third-party verifications or conservative estimates to establish that their real emissions are below default assumptions. In practice, however, countries with little existing clean technology will pay higher CBAM costs in the near term. Over time, policy solutions will be needed – for example, development of a domestic carbon pricing mechanism or government incentives for clean tech. In the immediate term, though, the only viable strategy is compliance: collect whatever emissions data one can, use recognized tools to demonstrate best-available performance, and lobby for supportive measures.

In regions where sustainable technologies are not yet widely accessible or affordable, what strategies could be pursued to navigate CBAM requirements?

Ans- In these contexts, the focus should be on data credibility, supplier support, and collaborative efforts, rather than immediate technology overhauls. Companies can pursue these strategies:

• Leverage available CBAM tools and expertise: Even if green technology is scarce, businesses can use existing digital solutions to manage compliance. The same emissions-reporting platforms and data templates apply universally. Firms should also seek partnerships or joint ventures with international players who can transfer knowledge or support cleaner practices.
• Focus on data quality and conservative reporting: Where actual measurement equipment isn’t affordable, companies may use proxy data or best-practice estimates to certify their carbon content. Providing any credible, documented estimate will generally lead to a lower CBAM charge than the strict default factor. Over time, incremental improvements (for example, installing even modest energy meters) can be made.
• Work through trade associations and government: Industries can pool resources via chambers of commerce or sector associations to share compliance costs and expertise. Governments, in turn, should push ahead with policies that improve sustainability access – for example, expanding renewable energy availability or setting up training centres for carbon accounting. These longer-term efforts will make CBAM compliance easier down the road.
• Consider supply-chain adjustments: In some cases, firms might shift parts of production to greener sites or source intermediate inputs from countries with low-carbon energy. Likewise, exporters can seek CBAM waivers or preferential terms for certified low-carbon exports.

Throughout, the key is to treat CBAM compliance as a survival priority. Even in the absence of affordable green tech, companies can dramatically reduce risk by investing in process improvements and documentation. As our Kuehne+Nagel analysis emphasizes, the cost of non-compliance is severe, so a proactive compliance mindset is the most reliable “way out” in any country.