The EU Carbon Border Adjustment Mechanism (CBAM) came into full financial force on 1 January 2026. It is not a tariff. It is not a quota. It cannot be negotiated away in an FTA. It is a carbon tax on the embedded CO₂ in every tonne of steel, cement, aluminium, fertiliser, hydrogen, and electricity imported into the European Union — calculated at the EU's own carbon price (currently €70–100 per tonne) and payable by EU importers at the border.
The mechanism is simple and merciless in its logic: every EU manufacturer already pays a carbon price on every tonne of CO₂ they produce, through the EU Emissions Trading System (EU ETS). CBAM ensures that foreign producers face exactly the same cost — so that EU buyers cannot gain a competitive advantage by sourcing from countries with no carbon pricing. It is the most consequential trade-climate measure ever enacted. And unlike an anti-dumping duty, which can be challenged at the WTO over years of litigation, CBAM is designed to be WTO-compliant from the start — and almost certainly will survive any challenge.
India signed the EU-India Free Trade Agreement on 27 January 2026 — the same week CBAM entered its definitive phase. The FTA contains an Annex on Carbon Border Measures that provides India with a technical dialogue channel and a most-favoured-nation clause. It provides no exemption, no waiver, no discount, and no delay in CBAM liability for Indian exporters. Government sources confirmed to Business Standard: the EU was unwilling to provide any country-specific flexibility. The FTA actually makes CBAM more permanent — because the Annex embeds it into the bilateral framework rather than treating it as a temporary trade barrier India could challenge.
For Gujarat and Chhattisgarh — two states that between them account for a disproportionate share of India's CBAM-exposed industrial production — this is not a future risk to be managed. It is a present financial liability that is being incurred on every export shipment right now. The only question is whether your company will absorb it as a permanent cost of doing business in Europe, or eliminate it through CCUS investment that removes the embedded carbon from your products.
Gujarat is India's most industrialised state — home to its largest chemical complex, a major steel and metals base, significant cement production, and the world's largest single-site fertiliser complex at Bharuch. It is also the state most exposed to CBAM, because its three largest industrial export sectors — steel, chemicals & fertilisers, and cement — are all among the six product categories CBAM covers. For Gujarat's industrial companies, CBAM is not a distant policy risk. It is an active financial liability on every shipment departing Hazira, Mundra, Pipavav, and Dahej today.
JSW accounted for 20% of India's EU steel exports. Surat operations feed European automotive and construction steel supply chains. At €173.8/tonne CBAM duty, JSW faces hundreds of millions of euros in annual exposure across its Indian operations. JSW has announced a low-carbon "Salav" plant — but that will not be ready for years. In the interim, every tonne shipped to Europe carries the full CBAM carbon cost.
Gujarat Narmada Valley Fertilisers and Gujarat State Fertilisers & Chemicals are India's flagship fertiliser exporters. Urea and ammonia are directly CBAM-covered. At 2.5–3.0 t CO₂/t urea and EU ETS at €80/t, GNFC's annual CBAM liability on European exports could exceed USD 60–90 million. The green urea premium exists — but only companies that have installed CCUS can claim it. GNFC without CCUS loses on both sides: pays CBAM and forfeits the €40–80/t green premium.
Ambuja (Kodinar, Ambujanagar, Darlaghat) and ACC (Wadi, Jamul) operate in Gujarat and their parent Holcim/Adani Cement Group has EU market exposure through clinker and cement product exports. India's clinker intensity (0.72 t CO₂/t) exceeds the EU benchmark. The EU is specifically proposing to expand CBAM to processed cement products from 2028–2030 — which would dramatically expand the exposure of Gujarat's cement manufacturers.
Chhattisgarh is home to India's first large-scale integrated steel plant — SAIL Bhilai — and a rapidly growing cluster of private steel, sponge iron, and ferro-alloy producers. The state contributes significantly to India's total steel export volume, and its producers are amongst India's highest carbon-intensity operations. Bhilai's blast furnace technology, built in 1955 with Soviet collaboration, produces steel at approximately 2.4–2.6 tonnes of CO₂ per tonne — well above India's national average, and 50–60% above the EU benchmark. At full CBAM rates, a single 1-million-tonne export from Bhilai to the EU incurs a CBAM duty of approximately €240–260 million annually.
Chhattisgarh's steel cluster has two additional vulnerabilities. First, the state's sponge iron (DRI) producers — using coal-based rotary kilns in a process unique to India and with no CCUS precedent — face the highest per-tonne CBAM liability of any steel production route globally. Second, Chhattisgarh's steel producers are in a deeply disadvantaged position relative to EU importers from Norway and the UK, where integrated steel plants have already begun CCUS installation — enabling them to declare near-zero embedded carbon and pay zero CBAM certificates.
CBAM is a zero-sum game. Every country whose exporters install CCUS and reduce embedded carbon towards zero gains a price advantage over countries that do not. India faces competition from Turkey, South Korea, Vietnam, and Brazil — all actively pursuing CCUS and decarbonisation precisely because CBAM creates a direct financial reward for doing so. India's inaction is their opportunity.
Norway's Northern Lights project is already transporting and storing CO₂ from multiple European industrial plants. Heidelberg Materials' Brevik cement plant — the world's first full-scale cement CCS — began operations in 2024. Norwegian cement exported to EU markets carries near-zero embedded carbon. CBAM liability: approximately zero. Indian cement exported to EU: CBAM liability €50–70 per tonne. Norway has a €50–70/tonne structural price advantage over Indian cement — and it is permanent and growing as EU ETS prices rise.
Turkey is India's most direct competitor for EU steel market share. Turkey is building its own Emissions Trading System specifically to generate CBAM-deductible domestic carbon costs. More critically, Turkey's steel industry is already transitioning to electric arc furnace (EAF) scrap-based production, which carries 60–70% lower CO₂ intensity than India's blast furnace and DRI routes. Turkish steel's embedded carbon is already at 1.2–1.4 t/t steel vs. India's 2.2–2.5 t/t. Turkey will not displace India from the EU market over years — it will do so over months, as CBAM price differentials compound in 2026 and 2027.
POSCO and Hyundai Steel have committed to CCUS integration programmes that are progressing ahead of India's. South Korea already has a national ETS — meaning Korean steel producers can deduct a domestic carbon cost from CBAM liability. The Rystad Energy analysis specifically names South Korea and Turkey as most likely to displace India from the EU's top 3 steel suppliers as CBAM pricing takes effect. The displacement is not theoretical — it is being actively planned in Seoul boardrooms today.
CBAM creates a structural incentive for EU manufacturers to source steel domestically or from low-carbon EU producers rather than from high-carbon Indian exporters. This is not a theoretical outcome — CBAM is a designed mechanism for reshoring carbon-intensive production back to the EU. thyssenkrupp's Carbon2Business programme and ArcelorMittal's €1.3B electric arc furnace investment at Dunkirk are both producing low-carbon EU steel at volumes that directly compete with Indian steel in EU construction and automotive supply chains. JSW's own study warns that EU production by Indian companies' European subsidiaries could increasingly substitute for imports from India.
NCM's sector-level liability modelling uses published plant capacity data, India average and sector-specific CO₂ intensity (IEA, WSA, Cement Manufacturers' Association), and EU ETS forward price of €80/t for 2026–2028. These are estimates based on publicly available data — individual plant liability will vary with actual EU export volumes, verified plant-level emission data, and EU ETS price at time of import.
| Company / Plant | State | Sector | CO₂ Intensity (t/t product) |
Est. EU Export Volume |
Annual CBAM Liability @€80/t |
CCUS Status |
|---|---|---|---|---|---|---|
| JSW Steel — Surat/Gujarat ops | Gujarat | Steel | 2.1–2.3 t/t | ~500,000 t/yr | €84–92M | ⚠ SEED programme active, no CCUS at site |
| GNFC — Bharuch, Gujarat | Gujarat | Fertilisers | 2.5–3.0 t/t urea | ~200,000 t/yr | €40–48M | ⚠ No CCUS — forfeits green urea premium too |
| GSFC — Vadodara, Gujarat | Gujarat | Fertilisers | 2.5–2.8 t/t urea | ~100,000 t/yr | €20–22M | ⚠ No CCUS programme announced |
| Ambuja Cement — Gujarat Plants | Gujarat | Cement | 0.72–0.80 t/t clinker | ~300,000 t clinker/yr | €17–19M | ⚠ Growing as CBAM expands to processed cement |
| SAIL Bhilai Steel Plant | Chhattisgarh | Steel | 2.4–2.6 t/t steel | ~800,000 t/yr | €154–166M | ❌ No CCUS programme for Bhilai |
| JSPL — Raigarh, Chhattisgarh | Chhattisgarh | Steel (DRI) | 2.8–3.5 t/t (coal-DRI) | ~400,000 t/yr | €90–112M | ❌ Coal-DRI has no CCUS globally — NCM developing world-first |
| COMBINED ESTIMATED ANNUAL CBAM LIABILITY — Gujarat & Chhattisgarh 6 companies shown above; full state liability including MSMEs significantly higher |
€400–460M+ | Per Year. Beginning Now. | ||||
NCM estimates based on public plant capacity data, IEA/WSA CO₂ intensity benchmarks, and EU ETS price of €80/tonne. Individual company liability will vary with actual EU export volumes, verified emission data, and ETS price at import date. This table is for indicative purposes. Contact NCM for a company-specific CBAM liability assessment.
The single most important commercial insight from NCM's CBAM modelling is this: for steel and fertiliser producers in Gujarat and Chhattisgarh with significant EU export volumes, CCUS investment pays back from CBAM avoidance revenue alone — before accounting for carbon credit income, green product premiums, or government support. CBAM converts CCUS from a climate expenditure into a hard-currency market access investment with a calculable payback period.
The arithmetic for GNFC Bharuch is illustrative. GNFC exports approximately 200,000 tonnes of urea to European markets annually. At 2.8 t CO₂/t urea and €80/t EU ETS: annual CBAM liability = 200,000 × 2.8 × €80 = €44.8 million per year. CCUS investment to produce CCS-certified green urea — capturing 90% of the SMR CO₂ — reduces CBAM liability to approximately €4.5M/year. Annual CBAM saving: €40M. CCUS capital cost for a 200,000 t/yr green urea CCS project: approximately €60–80M. Payback from CBAM avoidance alone: 18–24 months.
Now add the green urea premium. European food companies, fertiliser distributors, and Scope 3 emission-conscious agricultural buyers are paying €40–80/t premium for certified green urea. On 200,000 tonnes, that is €8–16M/year of additional revenue. Total annual benefit of CCUS for GNFC Bharuch: €40M CBAM saving + €12M green premium = €52M/year. CCUS capital cost: €70M. Payback: less than 18 months. This is not a climate investment case — this is one of the best financial returns on any industrial capital project in India today.
CBAM does not stay still. The EU has publicly committed to scope expansion and price escalation. Every passing year of inaction increases the liability. This is the confirmed and projected timeline.
CBAM quantification is the starting point — not the end point. Once a company understands its liability, the next steps are technology selection, storage pathway identification, DFI finance structuring, and regulatory permitting. NCM provides all of these services as an integrated advisory package, drawing on our founding team's experience in Australia's operational CCUS sector and our structured knowledge partnerships with Norway, UK, Netherlands, Germany, and Denmark.
For Gujarat and Chhattisgarh companies, the most critical near-term advisory inputs are: (1) plant-level capture technology feasibility — identifying the right amine, physical solvent, or oxy-fuel system for your specific flue gas composition and operating constraints; (2) storage pathway — whether that is Deccan Traps basalt mineralisation (uniquely close to Gujarat's industrial belt), offshore KG basin storage (for AP-linked operations), or Gondwana saline aquifer (for Chhattisgarh steel); and (3) CBAM-anchored finance — structuring the investment using CBAM avoidance cash flows as the primary debt service, supplemented by carbon credit and green product premium revenue.
NCM's advisory is independent of technology vendors, engineering contractors, and financiers. We act exclusively in the interest of our industrial clients — designing CCUS projects that serve their commercial objectives, not those of equipment suppliers or DFI balance sheets.
Whether you are a government body seeking policy advice, an industrial company facing CBAM exposure, or an investor seeking CCUS project opportunities — our team is ready to engage.