Trade Blog

From 1 January 2026, CBAM moves from reporting-only (transitional phase, October 2023 to December 2025) to full operation. EU importers of covered goods must now purchase and surrender CBAM certificates — not just submit emissions reports.

What changes on 1 January 2026: (1) EU importers must purchase CBAM certificates from the EU CBAM Registry at a price linked to the weekly EU ETS auction price (approximately EUR 65-70/tonne CO2 as of early 2026); (2) Certificates equal to the embedded CO2 emissions in imported goods must be surrendered by 31 May of each year for the previous year' imports; (3) CBAM declarants (EU importers) must be authorised by their national CBAM authority before importing.

What Indian exporters must do: (1) Provide EU importer with embedded emissions data per tonne of product; (2) Arrange third-party verification if required; (3) Address CBAM cost allocation in export contracts — who pays for CBAM certificates, Indian exporter (via lower price) or EU importer (directly)? (4) Invest in decarbonisation — every tonne of CO2 eliminated at source saves approximately EUR 65 in CBAM at current prices.

Use AJG' CBAM Calculator at tools/cbam-calculator.php to model your specific CBAM liability.

The EU Commission extended the EUDR compliance deadline for most operators by 12 months. The extension was driven by implementation readiness concerns from trading partners including India, Brazil, and Indonesia, as well as practical challenges with the EU TRACES NT platform readiness.

What Indian exporters gained: Additional time to implement geo-location systems for coffee, rubber, and leather supply chains. More time for TRACES NT platform to become operational. Additional time for India-EU bilateral equivalence negotiations.

What has NOT been gained: The obligation is not removed — it is delayed. Geo-location (GPS coordinates of production plots), deforestation-free documentation, and TRACES NT due diligence statements are still required. Operators who treat this extension as permission to postpone will face the same compliance cliff at the new deadline.

Action plan despite the extension: (1) Map your supply chain to farm/plantation level — this takes 6-12 months for complex supply chains, so start now; (2) Register on EU TRACES NT portal — registration takes 2-4 weeks; (3) Engage your EU importers on their EUDR readiness programme — most will have a supplier questionnaire in 2025; (4) Engage with Coffee Board / Rubber Board / Council for Leather Exports for sector-specific EUDR guidance. The companies that start now will be ready; those who wait will not.

CSRD entered its first reporting cycle for large EU companies (500+ employees) in the 2025 financial year. AJG reviewed supplier questionnaires sent by 12 EU companies in automotive, food, pharma, and consumer goods to their Indian suppliers. The pattern is actionable.

The 5 most requested data points from Indian suppliers:

1. GHG Emissions (Scope 1 and 2): All 12 EU buyers requested total greenhouse gas emissions in tonnes CO2 equivalent per year, with measurement methodology specified. GHG Protocol Corporate Standard is the accepted methodology.

2. Energy consumption and renewable percentage: Total energy consumed (MWh/year) and percentage from renewable sources. Indian manufacturers with rooftop solar or green PPAs have a significant advantage.

3. Worker welfare: Actual wages vs minimum wage (%), lost-time injury rate (LTIR), employee turnover rate, and whether a grievance mechanism exists.

4. Water consumption: Total water consumption (cubic metres/year) and source. Water-intensive industries (textiles, leather, food) are scrutinised most carefully.

5. Chemical management: REACH SVHC absence confirmation and RSL (Restricted Substance List) compliance statement.

Indian suppliers who cannot provide this data risk being de-listed. Begin implementing GHG accounting and worker welfare data collection systems now — these take 6-12 months to become reliable.

DGFT revised RoDTEP rates effective April 2025, covering approximately 1,200 tariff lines. The revision reflects updated analysis of embedded tax burden across export sectors.

Key changes by sector:

Pharma and chemicals: Most API and pharmaceutical formulation RoDTEP rates increased by 0.1-0.3 percentage points, reflecting higher embedded GST and customs duty burden. New range: 1.5-3.2% for pharma APIs (up from 1.3-2.9%).

Engineering goods: Auto components reduced by 0.05-0.15 percentage points for high-volume categories. Precision machined parts: slight increase. Industrial machinery accessories: unchanged.

Textiles: Garments and made-ups broadly maintained. Technical textiles: increased 0.2 percentage points. Home textiles: decreased 0.1 percentage points for large exporters.

Agro-food: Rice, spices, and processed food broadly unchanged. Marine products: small decrease reflecting reduced input duty burden.

Action required: Review your specific HS codes against the updated RoDTEP rate schedule at DGFT. If your rates increased, ensure shipping bills are filed with the correct updated rate. Use AJG' RoDTEP Finder at tools/rodtep-finder.php to look up your current rate.

The EU revised Product Liability Directive (PLD) — replacing the 1985 original — explicitly covers software (standalone and embedded), AI systems, and digital files. For Indian exporters of technology-enabled products, the changes are material.

Key changes affecting Indian exporters:

Expanded product definition: The new PLD explicitly covers software and AI systems. Indian software companies selling directly to EU consumers or embedding software in exported hardware are clearly within PLD scope.

Damage to data: The new PLD covers damage to data — not just physical goods or personal injury. Indian software that corrupts EU user data creates PLD liability. This is a genuinely new category of exposure.

Disclosure obligations: Courts can now order manufacturers to disclose technical documentation to plaintiffs. Indian manufacturers should ensure technical documentation is accurate and complete.

10-year liability period maintained: Indian manufacturers must retain technical documentation for 10 years. The EU authorised representative is the liable party in EU for PLD purposes — choose your EU AR carefully and ensure appropriate indemnity provisions in your AR contract.

Review your EU product liability insurance coverage. Consult EU product liability counsel if you have high-volume EU consumer product sales.