Ludhiana: Indian industry leaders are urging the government to implement a robust carbon credit framework as global markets tighten emission regulations. The European Union’s Carbon Border Adjustment Mechanism (CBAM), set to be fully operational by 2026, is expected to impose financial penalties on exports lacking verifiable sustainability credentials.
CBAM impact on exports
CBAM will levy a carbon tax on imports from countries with less stringent environmental policies, affecting sectors such as steel, cement, aluminum, and fertilisers. During the transition phase from Oct 2023 to the end of 2025, importers must report the carbon footprint of their goods. However, from next year, compliance will be mandatory, effectively taxing carbon-intensive imports.
Manufacturers’ concerns
Ludhiana, a major manufacturing hub for exports to Europe, faces economic risks without a structured carbon credit system. Industry representatives are calling for urgent government intervention. “The govt should establish a carbon credit policy immediately,” said Lokesh Jain, president of the Confederation of Indian Industry (CII) Ludhiana zone. “Without such a framework, Indian manufacturers will lose their competitive edge in global markets, particularly in the European Union.”
Harsimerjit Singh Lucky, president of the United Cycle Parts Manufacturers’ Association (UCPMA), echoed similar concerns, warning that Indian exporters risk losing market share to China. “The Chinese govt is swift in adapting to global regulations, giving them an advantage in international trade. Indian industries need policy support and awareness programs on emission reduction strategies,” he said.
Challenges in carbon reduction
Gurpreet Singh, senior manager at Highway Industries, claims that exporters are compiling data on supply chains, energy usage, and raw materials already to assess carbon emissions but their primary challenge is not only documentation but also reducing emissions. “Solar energy is a viable solution, but space constraints make it impractical for all manufacturers. Govt support is needed not only for auditing and certification but also for establishing a systematic carbon credit trading system,” he said.
Municipal initiatives
Ludhiana’s municipal corporation has initiated efforts to capitalise on carbon credits. A project management consultant will be appointed to evaluate ongoing projects for carbon trading potential. Initiatives such as waste remediation, centralised solid waste processing, compressed biogas plants, and LED streetlight replacements are under review for earning carbon credits.
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Understanding carbon credits
A carbon credit system allows companies using cleaner energy sources to earn credits, which can be sold to entities relying on fossil fuels. This mechanism incentivizes sustainability and offsets emissions from high-carbon industries. Without a formalized framework, Indian industries risk financial setbacks and reduced global competitiveness. Industry leaders and experts agree that immediate government action is necessary to align India with global sustainability norms and safeguard its export market.
