Govt May Reimburse CBAM Certification Costs For Small Steel Exporters Under Export Scheme

The government is considering a proposal to support micro and small steel exporters by reimbursing a major portion of the costs involved in complying with the European Union’s Carbon Border Adjustment Mechanism (CBAM).

According to a report by Moneycontrol, under the proposed plan, expenses related to CBAM certification and third-party verification could be included under the Trade Regulations, Accreditation and Compliance Enablement (TRACE) intervention of the Export Promotion Mission (EPM). Currently, such costs are not specifically covered under the scheme.

According to the report, eligible micro and small exporters may receive reimbursement of up to 90% of the certification and verification expenses.

The concerned ministry has reportedly agreed in principle to provide support, and the proposal has been sent to the Directorate General of Foreign Trade (DGFT) for consideration before being placed before the Empowered Committee.

Once approved, export promotion councils will be able to submit reimbursement claims on behalf of eligible exporters.

The proposal comes at a time when the EU’s CBAM has entered its definitive phase from January 1. The mechanism applies to carbon-intensive imports, including iron and steel, aluminium, cement, fertilisers, hydrogen and electricity.

Under CBAM rules, European importers must report the embedded carbon emissions in imported goods and surrender CBAM certificates based on the emissions linked to those products.

The emissions information submitted by exporters must be independently verified by recognised agencies.

Indian steel exporters will need to hire EU-approved verification agencies to audit their production processes, validate emissions data and issue compliance certificates.

The certification process is expected to cost around Rs 10 lakh per company, creating a significant financial burden for smaller exporters.

While larger companies may have the resources to absorb these additional expenses, micro and small enterprises are expected to face greater challenges in meeting the new requirements.

Industry stakeholders have requested that CBAM certification costs be treated similarly to other export-related testing, inspection and certification expenses already eligible for reimbursement under the TRACE framework.

The proposal, if cleared, could provide relief not only to small steel exporters but also to other carbon-intensive sectors such as aluminium and cement that fall under the scope of CBAM.

The mechanism does not impose a direct tariff on steel imports but effectively increases costs for products with higher carbon footprints, encouraging exporters to adopt cleaner production practices and improve emissions reporting.