The Carbon Border Dilemma: India’s Stand on EU’s Climate Protectionism

Sepehr Sajjadieh via Unsplash

“Is the road to a greener world being paved with protectionist intentions?”

This is one of those questions that captures a growing tension at the heart of global climate politics. In spite of such mechanisms, such as the European Green Deal and the Carbon Border Adjustment Mechanism (CBAM), positioning the European Union as an environmental frontier within Europe, they only increase the extraterritorial effects of its policies. The EU engages in this climate diplomacy rhetoric of cooperative leadership about stopping carbon leakage while encouraging the passage of cleaner practices around the world. Critics see them as forms of climate colonialism, imposing costly trade barriers on the Global South countries in the name of environmentalism (Bocquillon, 2024).

Introduction

India, one of the fastest-growing economies and which is expected to play a leading role in global energy transition, finds itself at the center of this controversy. Although pledged to net-zero emissions by 2070 and progressively raising its share of renewable energy, India still has structural issues: energy poverty, development demands and a chronic dependence on coal. Certainly, the policy reactions and diplomacy alignments of the nation concerning the CBAM are indicative of larger concerns, such as those of climate justice, sovereignty, and just transition. 

Increasingly, current debates in academia and policy are questioning whether the EU-decreed climate policies indeed constitute a multilateral agreement and whether, by and large, they do institutionalize current global imbalances (Ulgen, 2023). Scholars and experts in the Global South argue that these models can endanger asymmetries in global governance, furthering European competitiveness at the cost of developmental equity (Rajamani, 2021). 

This article examines the structure and implications of EU CBAM; the response of India and the wider position of the Global South; and asks: can green diplomacy free itself from the extractive logics of colonial trade? In the process, it adds to the new literature on climate governance, trade justice and the shifting dynamics between Europe and Asia. The article continues by first deconstructing the EU’s climate policy architecture and its logic, followed by a discussion of India’s green shift. It goes on to examine the threats that CBAM poses to the Global South and strategic counter-measures from India and other countries in Asia and lastly, the roadmaps to a more just green order.

The EU's Climate Framework: Between Intensity and Ambition

The European Green Deal, agreed in 2019, has the ambitious target of a climate-neutral EU by 2050 (European Commission, 2025). At the heart of this policy is the Carbon Border Adjustment Mechanism (CBAM), which will charge carbon tariffs on the imports of high-carbon products like steel, aluminium, cement, and fertilizers from low-climate policy countries. Planned for total application by 2026, CBAM would seek to cover the risk of "carbon leakage," or that production will relocate to locations with less stringent environmental policies, hence diluting overall emission mitigation goals globally (European Commission, 2025; Carbon Market Watch, 2024). Despite this, the mechanism has been subject to criticism from a range of actors, including Centre for European Policy Studies (CEPS, 2024) analysis and reporting in the Financial Times, pointing to fears that CBAM will disproportionately hit developing economies whose emissions are primarily a result of developmental necessity rather than overconsumption.

Critics also contend that the EU's predominantly unilateral strategy, with minimal consultation of impacted nations, threatens to widen global inequalities and feelings of injustice. As such, civil society organizations and policy analysts stress the need to pair CBAM revenues with strong climate finance and technology transfer to assist developing nations in their low-carbon transitions, thus promoting equity and global cooperation (Climate Action Network, 2024). Though CBAM is an important addition to the EU's climate policy agenda, long-term success hinges on reconciling environmental ambition with inclusive and equitable global governance.

India’s Green Transition: Aspirations and Realities

India has set its goal to achieve net-zero emissions by 2070 and target 50% of electricity from renewables by 2030. A considerable amount of progress has been made, solar capacity has grown more than 20 times in a decade and funds are pouring in for green hydrogen and electric vehicles. The Adani Group, for example, is constructing a renewable energy facility in Gujarat estimated to power entire European countries (The Guardian, 2025).

However, coal remains the dominant, powering more than 70% of electricity. This dominance owes to both structural economic reliance as well as critical energy access needs for millions of people. It is estimated that India needs investments worth more than $10 trillion to meet its net-zero targets, according to the Council on Energy, Environment and Water (CEEW). Policy experts like Arunabha Ghosh (2023) caution that such climate mechanisms as CBAM can derail India’s transition by restricting access to overseas markets at the time when India is scaling up green production.

Unequal Burdens: Global South and the Problem of Climate Justice

EU’s CBAM and Green Deal policies are causing heavy damage to textile-intensive exports from developing countries, mainly India, Bangladesh and Indonesia. Highly carbon-intensive textiles amount to extra costs for exporters with little green technology, due to the carbon pricing of the CBAM, making them less competitive in the European market. Textiles are not yet covered under CBAM but will definitely be included soon, putting further pressure on these countries to convert to cleaner production.

As per a 2023 study by the UN Conference on Trade and Development (UNCTAD), such lower-income countries are threatened with an 8 percent export loss due to CBAM, whereas Asia and Africa are expected to feel the most severe impacts. Above those, there are increased environmental standards due to the Green Deal which hedge in textile exporters to innovate their way towards sustainability under limited access to green technologies and higher compliance costs.

Condemnations say such a measure might only reinforce the historical inequalities and colonial trading legacies with no regard to the CBDR clause of the Paris Agreement. European green policies may create a more entrenched dependent and extractive economy from the Global South textiles sector instead of facilitating a more balanced transition (Bocquillon, 2024). Without constructive policies backing them, CBAM and the Green Deal are just as likely to widen economic disparities rather than promote climate justice.

Strategic Responses: From Resistance to Realignment

India has spoken out against CBAM in several international forums, such as the G20 and COP28, on the grounds that unilateral climate tariffs are contrary to multilateralism. It has also reacted with strategic pragmatism, though. The National Green Hydrogen Mission and green industrial park incentives reflect a turn towards self-reliance in clean tech.

India is also pushing for global climate financing reforms at the same time. The demand of Prime Minister Modi for $1 trillion climate finance during COP26 highlighted the rhetoric-commitment gap from the developed world. Technology transfer and financing for just transition have become the conditionality of deeper cooperation in trade talks between India and the EU now.

Regionally, projects such as the India-Middle East-Europe Economic Corridor (IMEC) are being marketed as climate-resilient substitutes for Eurocentric supply chains-global trade networks long shaped by EU standards and regulations, which often impose costly compliance burdens on developing country exporters. These new partnerships represent a rebalancing of India’s foreign and climate policy in alignment with evolving global norms (Kathuria et al., 2025).

Green Diplomacy or Climate Colonialism? The Road Ahead

The EU’s leadership on climate is still paramount in international decarbonisation, but its strategy needs to be qualified by equity and inclusiveness. Rollout of the CBAM has already triggered debates over whether or not environmental aims can be pursued without slipping into protectionism. Tandon and Le Marie (2024) argue that by imposing carbon tariffs on imports like steel and aluminium from India, the EU is not only advancing climate goals but also protecting its own domestic industries from competition by making non-EU goods more expensive-effectively shielding sectors already subject to strict environmental rules from being undercut by cheaper, more carbon-intensive imports. The green transition should not be a requirement for developing nations at the expense of their development sovereignty. 

A genuinely cooperative climate approach would prioritize climate finance, open technology-sharing arrangements, and context-dependent transition schedules. The next COP29 summit can be a trial ground for such values. Thinkers such as Navroz Dubash (Centre for Policy Research) have argued that there needs to be “plurilateral” climate groups that decentralize decision-making authority and bring regional voices into the fold (2023). India, and other Global South countries, have an important role in crafting this new climate multilateralism.

Conclusion 

Labelled ambitious, the EU climate policy encompasses a fine line between leadership and coercion. The various initiatives that CBAM engenders threaten to alienate those stakeholders, Europe is seeking to engage, especially where climate diplomacy begins to look more like economic protectionism. For India, the challenge lies in striking a balance in the space while advancing its energy transition and protecting development objectives. Climate politics offers India the opportunity to converse not about green versus economic justice but rather how to achieve both with inclusive governance. Getting around the North-South climate cleavage requires sympathy, bargaining and shared responsibility. 

The next chapter in worldwide climate diplomacy rides on how convincingly these ideas are honored. India’s answer, critical, strategic and assertive, illustrates both the complexity and potential in mapping this novel green order. In the green diplomacy vs. climate colonialism struggle, the outcome will not only be dictated by emissions policy, but by the moral context of global governance. The time to choose between imposition and inclusion is now.

This article represents the views of external contributors to STEAR's online digital publication, and not those of STEAR, which takes no institutional positions.

Diva Bhatia is an undergraduate student at Jesus and Mary College, University of Delhi,

majoring in Political Science. She has a strong passion for both fiction and research, with

academic interests focused on gender studies, the socio-political landscape of Northeast

India and public policy.

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