India-EU: Global Dynamics

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India-EU: Global Dynamics

For Prelims

  • European Union wants to be the first carbon-neutral region in the world by 2050 and have started the ‘European Union Green Deal’ to achieve this goal.
  • ‘Fit-for-55’ package, a communication of its 2030 climate targets by EU in which they have proposed the Carbon Border Adjustment Mechanism (CBAM), a carbon-pricing system proposed for imports into the EU.
  • The EU is India’s third largest trading partner, while India is EU’s 11th largest trading partner.

For Mains

  • From January 2023, importers will have to declare the emissions generated by production and won’t have to pay penalties.
  • However, from 2026 onwards there will be a gradual phasing out of emission trading allowance, and it will be completely phased out by 2035.
  • Initially five CITE (Carbon Intensive and Trade Exposed) sectors such as iron and steel, aluminium, cement, fertilizers and electricity will be taxed under CBAM.

Concerns for India

  • Developing countries have raised their concern on the legality of CBAM pointing out its conflict with World Trade Organization (WTO) and the United Nations Framework Convention on Climate Change (UNFCCC) norms and are afraid that it encourages protectionism.
  • Talks on India-EU Free Trade Agreement (FTA) that were stalled a while ago have picked up again and are scheduled to take place in June. The target to finalise the Free Trade Agreement has been set for 2023-24.
  • Rather than tax on exports proposed in CBAM, India and EU can cooperate better by investing in cleaner and greener technologies in India and helping the production in India to become cleaner.


 Source The Hindu

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