Aluminum exports from India may get impacted by CBAM

Aluminum exports from India to Europe are expected to be impacted by the Carbon Border Adjustment Mechanism (CBAM). CABM which officially takes effect in 2026 aims to realize climate neutrality in the EU by 2050.

According to statistics, India has an annual production capacity of primary aluminum of 4.1 million tons, accounting for 6% of total global production, of which 56% is for export.

Crisil, an Indian rating agency, said that India is one of the aluminum producers with the lowest cost in the world due to its integrated operating capability and low power costs as it has coal-based captive power plants.

Indian aluminum manufacturers are likely to lose their competitiveness due to CBAM while competing with producers in the Middle East, Canada, Norway, and Iceland, whose CO2 emissions are much lower. Besides, Middle Eastern countries’ further capacity expansion was expected to weaken India’s exporting competitive advantage.