New Delhi

Federation of Indian Chambers of Commerce and Industry (FICCI) on Tuesday said Europe’s tightening carbon-related trade regulations, particularly the Carbon Border Adjustment Mechanism (CBAM), are becoming a major concern for Indian exporters as India moves ahead with free trade agreement negotiations with European nations.

Speaking at a conference on next-generation trade agreements organised by FICCI, the chamber’s Secretary General Anant Swarup said Indian exports to Europe face a mix of opportunity and challenge amid evolving sustainability norms.

“Today, India’s exports to Europe face both an opportunity and a pressure. Opportunity because of the scale, purchasing power and diversification, and pressure because of increasingly complex standards, sustainability requirements, and carbon-related measures such as CBAM,” Swarup said.

He stressed that the key challenge would be ensuring that upcoming trade agreements translate into real benefits for exporters, MSMEs and service providers.

According to FICCI, Indian companies will need to prepare for stricter environmental and compliance standards as Europe sharpens its climate-linked trade framework.

Addressing the same event, Harish Ahuja said the European regulatory system could impose operational and financial burdens on Indian businesses, particularly small and medium enterprises.

“Businesses must increasingly comply with sustainability standards, SPS measures, due diligence requirements and emerging climate-related frameworks such as the Carbon Border Adjustment Mechanism or CBAM,” Ahuja said.

He added that these measures would have significant financial and operational implications for exporters and highlighted the need for stronger support systems and greater preparedness among industries before trade agreements become fully operational.

The conference focused on how India could maximise opportunities arising from proposed trade agreements with the European Union, the United Kingdom and the European Free Trade Association (EFTA). Discussions centred on market access, sustainability compliance, regulatory frameworks and services trade.

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CBAM, introduced by the European Union, is designed to impose carbon-related costs on imports of certain goods into Europe, effectively linking trade competitiveness with carbon emissions and sustainability practices. Indian export sectors such as steel, aluminium, cement and fertilisers are expected to be among the most impacted by the mechanism.