BRICS nations oppose EU carbon border tax at the group's environment ministers’ meeting

EU Just Weaponised Carbon Taxes to Starve India's Real Economy

Europe is not fighting climate change—it is fighting your country's ability to earn foreign exchange.

Last week, BRICS environment ministers unanimously rejected the EU's Carbon Border Adjustment Mechanism (CBAM), but Indian media buried the story because they do not understand supply chain economics. I will decode it for you.

What Actually Happened

The European Union passed a law that adds a carbon tax on steel, cement, fertiliser, and aluminium imports. Starting January 2026, Indian exporters will pay this tax or match EU production costs—costs that are structurally impossible for Indian mills to meet because European electricity costs four times more than ours, and their labour regulations push overhead through the roof.

BRICS nations—Russia, India, Brazil, China, South Africa—formally opposed CBAM at their environment ministers' summit. India's formal position: this is disguised protectionism. The mechanism targets exactly those sectors where India has competitive advantage: steel (we export 10 million tonnes yearly to Europe), cement (5 million tonnes), and fertiliser (critical for African agriculture). Europe says it is protecting climate. Reality: it is protecting European steelmakers and cement manufacturers from cheaper Indian competition.

What This Means for India

Your government is still writing diplomatic notes. Your MSME sector is already dying.

In Punjab, Haryana, and Odisha, foundries and steel mills operate on razor margins—typically 4-6 percent net profit. A carbon tax of EUR 50-80 per tonne (the projected range) eliminates margin entirely. These units cannot absorb the cost. They cannot raise prices because European buyers have alternatives. They will simply stop exporting to Europe by Q2 2025. Working capital lines will collapse. Banks classify these units as non-performing assets. Owners shift capital to real estate or gold—sectors that do not create employment.

This is not just about Europe. Once Indian steel becomes uncompetitive in EU markets, global pricing shifts. Vietnamese and Indonesian steelmakers undercut Indian prices elsewhere. Our export volumes fall 15-20 percent. The rupee weakens. Inflation rises for domestic consumers. This is cascade economics—one tariff creates currency pressure that hits everyone downstream.

The second layer: fertiliser. India exports 10 million tonnes of fertiliser annually, heavily to Africa. CBAM makes our fertiliser expensive. African farmers switch to Chinese or Iranian sources. Indian fertiliser companies lose markets. Domestic fertiliser prices rise because export demand collapses. Indian farmers pay more to grow food. Food inflation rises. This reaches your household in six months through dal prices and vegetable costs.

The Deeper Story Nobody is Telling

CBAM is not about carbon. It is about deindustrialisation through regulatory capture.

India spent 30 years building manufacturing capacity in steel, cement, and chemicals. We did this to create jobs for 1.4 billion people. The West benefited from globalisation when it suited them—when they offshored cheap manufacturing to Asia. Now, as India competes at global scale, they are rewriting rules retroactively. They call it ESG. They call it climate. It is actually Neo-Colonialism 2.0—controlling India's industrial growth through environmental regulations that are impossible to meet.

China faces CBAM too but China has $3 trillion in foreign reserves and state-owned enterprises that can absorb losses. India does not. We have family-owned foundries that will simply close. This is calculated—EU knows which countries break and which do not under tariff pressure.

What This Means for Your Health

You might wonder why a manufacturing story matters to chronic disease patients. Everything connects.

First, economic stress worsens disease outcomes. When foundry owners lose business, cortisol spikes. Families lose health insurance coverage that MSME employers provide. Rural workers migrate to cities without healthcare access. Stress-triggered diabetes and hypertension become unmanageable. Second, food inflation hits hardest in the bottom 40 percent of India. When fertiliser prices rise, nutrition density falls—people buy more grains, fewer vegetables and proteins. This accelerates metabolic disease. Third, when domestic manufacturing collapses, India imports more processed foods. Ultra-processed foods drive thyroid dysfunction and cancer rates up. This is how trade policy becomes your disease vector—invisible, but absolute.

The cure is self-sufficiency. Not isolation. Self-sufficiency. A strong domestic manufacturing base means jobs, stable food prices, and nutritional security. CBAM forces India to choose: competitive manufacturing or environmental theatrics. We cannot have both under EU rules. Choose manufacturing. Let your government fight this in WTO forums, not accommodate it through diplomatic silence.

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Rajnish Sharma (RDS)