Daily Current Affairs : 14-September-2023
In recent times, the European Union (EU) has introduced a new mechanism called the Carbon Border Adjustment Mechanism (CBAM) that has sparked concerns and discussions worldwide. Commerce and Industry Minister Piyush Goyal has assured the Indian public that the government will take all necessary steps to protect the Indian industry from any adverse impacts stemming from CBAM. This essay delves into the essence of CBAM, its potential repercussions on the Indian industry, and Minister Goyal’s initiatives to mitigate its effects.
Understanding CBAM
CBAM’s Purpose:
CBAM, short for the Carbon Border Adjustment Mechanism, is essentially a carbon tariff imposed on products that have a high carbon footprint. The EU introduced this mechanism to tackle the issue of carbon emissions associated with the production of goods. It aims to level the playing field by ensuring that imported goods meet similar environmental standards as those produced within the EU.
Scope of CBAM:
- CBAM covers a range of carbon-intensive products, including iron and steel, aluminum, fertilizers, and electricity imports.
- Importantly, CBAM requires reporting on the carbon emissions generated during the production of these products.
- From 2026 onwards, additional import levies will be imposed on such carbon-intensive products.
Potential Impact on Indian Industry
Carbon Intensity of Indian Production: One of the critical concerns for India is that its production processes tend to be more carbon-intensive compared to countries like China. This carbon intensity makes Indian exports vulnerable to CBAM-related tariffs.
Economic Consequences:
- The imposition of CBAM tariffs on Indian exports could lead to increased production costs, reduced competitiveness, and a decline in export volumes.
- Indian industries may also face challenges in adapting to the stringent carbon emission standards demanded by CBAM.
Minister Goyal’s Initiatives
Collaborative Ecosystem: Minister Goyal has underscored the importance of creating a collaborative ecosystem where industry and the government work hand in hand to reduce the carbon footprint of Indian products. This partnership is crucial for achieving the goals set forth by CBAM.
Steel Industry Focus: Recognizing the significance of the steel industry, Mr. Goyal has emphasized directing special attention to this sector. This entails implementing measures to reduce carbon emissions in steel production processes.
Policy Interventions: Minister Goyal believes that policy interventions tailored to meet the demands of the contemporary world will give India a competitive edge. Such policies may include incentives for adopting cleaner technologies and renewable energy sources.
Important Points:
Certainly, here’s a bullet-point list highlighting the most important points from the essay:
CBAM – Carbon Border Adjustment Mechanism
- CBAM is a carbon tariff introduced by the European Union.
- Its purpose is to address carbon emissions associated with the production of goods.
- It imposes duties and tariffs on carbon-intensive products.
- CBAM covers products like iron and steel, aluminum, fertilizers, and electricity imports.
- Reporting of carbon emissions during production is a requirement.
- Additional import levies on carbon-intensive products begin in 2026.
Potential Impact on Indian Industry
- Indian production processes are more carbon-intensive than some other countries, making Indian exports susceptible to CBAM tariffs.
- Potential consequences include increased production costs, reduced competitiveness, and declining export volumes.
- Indian industries may need to adapt to stricter carbon emission standards.
Minister Goyal’s Initiatives
- Creating a collaborative ecosystem between industry and government to reduce the carbon footprint of Indian products.
- Special focus on the steel industry to reduce carbon emissions.
- Implementing policy interventions tailored to contemporary demands, such as incentives for cleaner technologies and renewable energy sources.
Why In News
Commerce and Industry Minister Piyush Goyal emphasized the government’s unwavering commitment to safeguarding Indian industries against the potential repercussions of the European Union’s Carbon Border Adjustment Mechanism (CBAM). He reaffirmed that comprehensive measures would be put in place to ensure the resilience and competitiveness of Indian businesses in the face of this new regulatory landscape.
MCQs about Safeguarding Indian Industry from CBAM
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What is the primary objective of the European Union’s Carbon Border Adjustment Mechanism (CBAM)?
A. To encourage carbon-intensive production
B. To impose tariffs on all imports
C. To reduce carbon emissions associated with imported goods
D. To promote unrestricted global trade
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Which products are covered by CBAM ?
A. Textiles and apparel
B. Electronics and gadgets
C. Iron and steel, aluminum, fertilizers, and electricity imports
D. Food and beverages
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Why is the Indian industry concerned about CBAM?
A. Because CBAM promotes free trade and benefits Indian exports.
B. Because CBAM imposes tariffs on Indian imports.
C. Because Indian production processes are more carbon-intensive.
D. Because CBAM only affects industries in China.
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What is one of the key strategies mentioned in the essay to address the impact of CBAM on Indian industry?
A. Implementing import restrictions
B. Promoting carbon-intensive production processes
C. Creating a collaborative ecosystem between industry and government
D. Reducing exports to the European Union
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What does CBAM stand for ?
A. Carbon Border Assessment Mechanism
B. Carbon Border Adjustment Mechanism
C. Carbon Border Allowance Measure
D. Carbon Border Compliance Mechanism
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