Berlin: Commerce and Industry Minister Piyush Goyal launched a sharp attack on the European Union's carbon border tax on Thursday, warning that the bloc was "inviting disaster" by piling costs on steel and other industrial goods through its Carbon Border Adjustment Mechanism (CBAM).
Speaking at a panel discussion titled "New Era, New Alliances: The Third Path?" at the Berlin Global Dialogue on October 22, Goyal said Europe was "shooting themselves in their own feet" with a growing pile of regulations that would raise the cost of living, push up inflation, and make European industry uncompetitive in global markets.
"You put a CBAM on yourself. You put a 50% duty to bring steel into your country, you are inviting disaster. Your cost of living will go up," Goyal said. "Your people will be unhappy. Your industry will be out-priced."
The remarks were aimed at two overlapping EU measures. The first is CBAM, a carbon charge imposed on certain imports — including iron and steel, aluminium and cement — meant to align the carbon costs faced by foreign producers with those paid by EU producers under the bloc's emissions trading system. The mechanism entered full operation on January 1, 2026.
The second is a tougher steel-import regime. Since July 1, 2026, the EU has run a tariff-rate quota system that caps steel imports eligible for duty-free access at 18.3 million tonnes a year across covered product categories; volumes above the quota attract a duty of 50%.
Goyal argued that these measures, layered on top of deforestation regulations and a thicket of other EU rules, would inflate the cost of every piece of infrastructure built in Europe — ports, airports, German autobahns, expressways, utilities and water pipelines — because each would be built with costlier steel, aluminium and cement.
He said the EU now has more than 75 to 77 regulations in play. "We've lost count. You keep adding to your regulations, add to the burden of your industry, make yourself uncompetitive," he said. "And of course, in some sense, it'll also create non-tariff barriers for others to trade with you."
He described some of the bloc's standards as "absolutely ridiculous" levels of protection for sectors such as steel, and said the battery of rules was doing the opposite of what the EU intended — closing borders and layering on restrictions that were "only hurting their own economy."
Goyal also sounded a warning about retaliation in what he called a "reciprocal world." "You bring in a regulation and stop some other country from working with you. They'll bring in two regulations, which will hurt your businesses," he said.
At the same time, Goyal said India wanted deeper cooperation with Europe — particularly access to European high technology such as electrolysers, which could help India produce green hydrogen and green steel at far lower prices. "I would love to have high-tech products from Europe, your electrolyser coming to help me make green hydrogen, help me make green steel at much better prices. But you put a CBAM on yourself..." he said, arguing that Europe's own tariffs were making such cooperation more expensive.
He framed the dispute in climate-justice terms, saying the EU's approach failed to recognise the principle of "common but differentiated responsibilities" — the idea that all countries share the climate burden but carry different obligations based on their circumstances and historical contribution to emissions.
He questioned whether the EU's approach accounted for developed nations' historical emissions and the need for developing economies to expand energy access and improve living standards.
He also criticised developed nations for failing to deliver the long-promised 100 billion dollars in annual climate finance to developing countries.
On competitiveness, Goyal predicted that the cost of living in Europe would rise and business competitiveness would fall, with high inflation to follow. He pointed to the struggles of the German auto industry, saying auto sales from Germany were down 15 to 20 per cent over roughly the last decade. "How will you be competitive in the future? You will ultimately outprice your industry," he said.
He contrasted Europe's approach with that of trade partners such as Singapore, where, he said, there was no CBAM and no deforestation rules. "I don't mind all these regulations. The more regulations you put onto yourself, the faster it will become difficult to sustain these kinds of costs," he said.
On the India–EU free trade agreement, Goyal struck an upbeat note. Speaking separately at the inauguration of the India Centre at the German Council on Foreign Relations (DGAP), he said the deal was expected to be signed at the end of the calendar year and could be operational within four to five months. "It will move very rapidly towards signature. And I want to thank all the countries of the European Union. Because this is one agreement and I urge you to reflect on the past: whether you have seen an agreement move with this alacrity," he said, adding that "the sense of urgency, the mutual commitment to make this happen was truly remarkable."
The negotiations were first launched in 2007, paused in 2013, revived in 2022, and the talks were wrapped up in January 2026. He added that India had secured a forward-looking most-favoured-nation assurance from the EU that any flexibilities granted to third countries under CBAM regulations would also be extended to India.
India and the EU together account for roughly a quarter of the world's gross domestic product and a third of its trade, making the agreement one of the most consequential trade deals under negotiation anywhere. The timing also matters because the deal would come into operation while CBAM is already fully in force, making the carbon levy a live question for Indian exporters shipping steel, aluminium and cement to European markets.
Posting on X after his remarks, Goyal said: "Trust is the NEW RARE EARTH. It is what defines the India-EU FTA."
More broadly, Goyal said India was pursuing trade partnerships across continents rather than choosing between the United States and Europe, with negotiations underway with Canada, Israel, the Gulf Cooperation Council, Mexico, the Southern African Customs Union, Mercosur and the Eurasian Economic Union.
(Reporting based on Moneycontrol and The Economic Times.)