European Union will tackle India's concerns on carbon tax, official says

FILE PHOTO: European Commissioner-designate for European Green Deal Frans Timmermans of Netherlands attends his hearing before the European Parliament in Brussels

By Manoj Kumar

NEW DELHI (Reuters) - The European Union has assured New Delhi it will hold two-way talks to tackle its concerns over tariffs proposed on imports of high-carbon goods such as steel and iron ore from India, the bloc's climate policy chief said on Friday.

Last month, the 27-nation EU approved the world's first plan to impose from 2026 a levy on imports of high-carbon goods ranging from aluminium and cement to power, fertilisers and hydrogen, aiming to reach net zero greenhouse emissions by 2050.

Indian industry officials estimate that nearly $8 billion of exports such as steel and iron ore would face tariffs initially, but all goods exported to the EU will be covered by 2034.

The EU official, Frans Timmermans, said he was confident the issue would be resolved bilaterally and it was too early to worry about the impact of penalties on exports from India.

"If CBAM has undesired results then we can correct it," the climate policy chief, who is on a two-day visit to India, told reporters after meeting industry leaders and government officials the previous day.

He was referring to the Carbon Border Adjustment Mechanism (CBAM) through which the EU plans to impose the steep tariffs, which range from 20% to 35%.

The move prompted India to warn it would complain to the World Trade Organisation while seeking to resolve the issue through talks.

Both sides would study the effects of the new mechanism during a scrutiny period for exporters from December, Timmermans added.

"It is absolutely not our intention to create a situation that could be perceived as protectionist," he said, ruling out any violations of WTO rules.

Earlier industry leaders queried the EU climate chief on relaxation of rules for small exporters and the prospect of "technology transfer" to achieve climate goals.

(Reporting by Manoj Kumar; Editing by Clarence Fernandez)