CBAM Countdown: What Indian Manufacturers & Exporters Must Finalize Before Jan 2026

The clock is ticking. In less than 4 months, the European Union’s Carbon Border Adjustment Mechanism (CBAM) will move from its transitional phase to full implementation. For Indian manufacturers and exporters in carbon-intensive sectors, 1 January 2026 is not just a date it’s a compliance deadline that will redefine market access to the EU.

If you are in production or exporting steel, aluminum, cement, fertilizers, to Europe or products containing these materials CBAM will directly impact on your pricing, competitiveness, and even customer relationships.

This article breaks down what Indian industries and exporters must finalize before January 2026 to ensure smooth compliance and avoid penalties or market loss.

1. Understand CBAM’s Shift from Reporting to Payment

Since October 2023, CBAM has been in its transitional phase, requiring quarterly emissions reporting without any financial adjustment.

From 1 January 2026 onwards, emissions data must be verified by an accredited independent verifier under EU standards before it is accepted for CBAM declarations. This means only verified emissions data can be submitted from 2026 onward.

From 1 Jan 2027, importers will need to purchase CBAM certificates equivalent to the embedded emissions in imported goods, minus any carbon price paid in the country of origin.

For Indian exporters, this means:

• Your EU customers will demand accurate, verifiable embedded emissions data.
• Poor or missing data will lead to default values, which are often higher and make your product costlier in Europe.
  

2. Identify Your CBAM Product Scope

The current CBAM scope covers mainly for India:

• Iron & Steel (including downstream products like tubes, pipes, sheets, coated steel)
• Aluminium
• Cement
• Fertilizers

By 2030, CBAM could expand to more sectors (e.g., organic chemicals, polymers, glass).

Action needs to be taken:

• Map all SKUs and HS codes in your EU exports.
• Confirm if they are covered under Annex I of the CBAM Regulation.

3. Set Up Primary Data Collection Systems

EU importers will prefer primary (site-specific) emissions data over generic defaults.
The European Commission’s Implementing Regulation (EU) 2023/1773 outlines detailed methodologies for calculating:

• Direct emissions (Scope 1) from production processes.
• Indirect emissions (Scope 2) from purchased electricity, steam, heat.
• Upstream emissions from inputs (especially for complex goods).

Action:

• Establish a GHG inventory system aligned to ISO 14064-1 or GHG Protocol Product Standard.
• Train internal teams or engage a third-party verifier to audit calculations.

4. Build EU-Ready Emissions Declarations (Starting 2026)

From 1 January 2026, EU importers must submit annual CBAM Declarations that include:

• Total embedded emissions per product (Scope 1 and Scope 2 emissions).
• Corresponding number of CBAM certificates calculated for transparency (note: certificates are not surrendered or paid for in 2026).
• Proof of any carbon price paid in the country of origin (e.g., currently zero in India, but may change with future carbon markets).

Action:

• Standardize product-level emission reporting using the official CBAM XML template.
• Maintain all relevant records for at least four years in compliance with EU regulations.

5. Get Verification Systems in Place (2025 Is Critical)

From 2025 onwards, all emissions data related to imported goods must be verified by an accredited independent verifier in accordance with EU standards before being accepted for CBAM declarations.

Action:

• Select verifiers accredited under standards such as ISO 14065 for GHG validation and verification.
• Conduct a mock verification in 2025 to assess data quality, identify gaps, and ensure readiness for 2026 reporting obligations.

6. Coordinate With EU Importers Now

Remember: Your EU customer is the CBAM declarant, but they rely entirely on you for emissions data.

If you cannot supply timely and accurate data, they may switch suppliers to avoid compliance risks.

Action:

• Sign data-sharing agreements with EU clients.
• Agree on calculation methodology and data submission timelines.

7. Prepare for Possible Cost Pass-Through

From 1 February 2027, EU importers will be required to purchase CBAM certificates to cover the embedded emissions of their imports. This means the embedded carbon cost will become part of your product’s landed price in Europe starting in 2027.

If your product’s carbon intensity is higher than the EU benchmark, your competitive advantage may diminish.

Action:

• Evaluate low-carbon process upgrades (e.g., renewable energy, efficiency improvements) well before 2027.
• Seek funding via Indian and EU green finance programs to reduce emissions before 2027.

8. Avoid Last-Minute Rush

Think of 2025 as your critical preparation and dry run phase because:

• From October 2023 (transitional period) through 2025, importers (and indirectly you as a manufacturer/exporter) must report embedded emissions quarterly, but no financial liability (payment) is yet imposed.
• In 2025, EU buyers will test their internal CBAM systems using your emissions data to prepare for full compliance.
• Any data gaps or errors in 2025 reporting will affect the accuracy and readiness of declarations in 2026, which could cause costly consequences once pricing starts in 2027.

Final Word: The CBAM Clock Is Ticking

Indian exporters who start now will not only meet CBAM requirements but also use this as a competitive differentiator.

Those who delay risk losing EU market share to lower-carbon competitors.

Next Steps for Exporters:

1. Map CBAM products in your portfolio.
2. Set up ISO 14064-aligned GHG data systems.
3. Engage a CBAM-trained verifier in 2025.
4. Work with EU buyers on declaration formats.

This blog reflects our ongoing commitment to sharing insights on CBAM. We look forward to your feedback at info@kbscertification.com.

About KBS Certification Services Ltd.

Founded in 2005, KBS is a globally recognized third-party assessment body, accredited to ISO 14065 by NABCB. With expertise in climate change, sustainability assurance, ESG, CBAM, Net Zero, and product certifications, we’ve validated and verified over 2500 projects worldwide under CDM, Verra (VCS), Gold Standard, and ISO 14064 standards.

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