Govt expresses concerns on carbon taxes in UK FTA: Report

In ongoing Free Trade Agreement (FTA) talks between India and the UK, the government has reportedly raised concerns regarding potential carbon taxes that may be imposed by Britain. According to three sources within the Indian government, there is apprehension about the UK introducing a tax on imports of high-carbon goods, particularly items like steel, news agency Reuters reported.

To address this issue, government is seeking the inclusion of clauses in the planned FTA that would necessitate bilateral consultations with Britain if a carbon border tax, like European Union's carbon border adjustment mechanism (CBAM), is implemented.

The objective behind these proposed clauses is to make the India-UK deal resilient to future developments, such as the introduction of a CBAM-like measure, which could potentially act as a new tariff barrier.

However, sources indicate that the UK side views this request as "unfair" since no final decision has been made on the adoption of such a measure. The EU's CBAM, described as the world's first tariff regime on imports of environmentally damaging products, began its initial phase in October, prompting concerns from trading partners like India, which plans to challenge it at the World Trade Organisation.

The three Indian government sources chose to remain anonymous due to the confidential nature of the ongoing trade pact discussions, and as of now, India's trade ministry has not provided a formal comment. Responding to the situation, the British Department for Business and Trade stated, "the UK and India continue to work towards an ambitious trade deal that works for both countries. We have always been clear we will only sign a deal that is fair, balanced and ultimately in the best interests of the British people and the economy."

The India-UK FTA talks have encountered various obstacles during negotiations, resulting in a delay of over a year from the initial deadline for the ambitious pact.

(With Reuters inputs)