An Indian steel components manufacturer was preparing an export order for a German buyer. The product specifications were approved, the commercial terms were agreed upon, and the shipment schedule was almost final.
Then an email arrived from the buyer’s compliance department.
The customer wanted to know how much carbon dioxide had been emitted during the manufacturing of the products. They also requested information about raw materials, production processes and emissions from the company’s steel suppliers.
The manufacturer had electricity bills, fuel consumption records, ISO certifications and an annual sustainability report. However, none of these documents clearly explained the emissions associated with each tonne of finished product.
The problem was not that the company had ignored environmental compliance. It simply had never organised its manufacturing data in the format required for the European Union’s Carbon Border Adjustment Mechanism (CBAM).
This is an illustrative business case, but the underlying challenge is relevant to many Indian exporters.
Since 1 January 2026, CBAM has entered its definitive phase, changing how certain carbon-intensive products are assessed when entering the European Union.
For Indian exporters dealing in covered products, CBAM readiness means understanding which products are affected, calculating embedded emissions, collecting supplier information and preparing reliable data for European customers.
The legal responsibility for submitting CBAM declarations generally rests with the EU importer. However, Indian manufacturers play an important role because they hold the production information needed to calculate actual emissions.
Understanding these requirements early can help businesses avoid documentation problems, maintain customer confidence and prepare for changing international trade expectations.
The Carbon Border Adjustment Mechanism is a European Union climate policy designed to address carbon emissions associated with selected imported goods.
Under the EU Emissions Trading System (EU ETS), European manufacturers face carbon pricing obligations. CBAM introduces a corresponding mechanism for certain goods produced outside the EU and imported into its market.
The objective is to reduce carbon leakage, where manufacturing activities shift to locations with different carbon costs.
CBAM is particularly relevant for Indian businesses exporting carbon-intensive industrial products because the emissions generated during production can influence the carbon-related obligations of their European customers.
Consider two manufacturers supplying the same steel product to an EU buyer. One uses an energy-intensive production process, while the other has invested in efficient equipment and better fuel management.
Their products may appear commercially similar, but their verified embedded emissions can be different.
Under CBAM, these differences can become relevant to the European customer’s compliance assessment and procurement decisions.
This is why CBAM compliance for Indian exporters should be viewed as both a regulatory preparation activity and an opportunity to understand manufacturing efficiency.
The current CBAM framework covers specified products in six major sectors: iron and steel, aluminium, cement, fertilisers, hydrogen and electricity.
For Indian businesses, the most relevant categories will depend on the products exported and their classification under the European Union’s Combined Nomenclature (CN) system.
Steel producers, aluminium manufacturers, certain engineering exporters, cement producers and fertiliser manufacturers should pay particular attention.
However, CBAM does not automatically cover every product containing steel or aluminium.
For example, a manufacturer exporting steel fasteners may fall within CBAM for particular product classifications, while another business exporting finished machinery may have products outside the existing scope.
An exporter should review the applicable EU CN code rather than relying only on the product’s commercial name or its Indian HS classification.
A major simplification introduced through Regulation (EU) 2025/2083 is the annual 50-tonne mass-based threshold.
This exemption generally applies to EU importers whose combined annual imports of covered goods in the iron and steel, aluminium, cement and fertiliser sectors do not exceed 50 tonnes.
The threshold does not apply to hydrogen or electricity.
An important point for Indian exporters is that this threshold is assessed at the EU importer level, not individually for every overseas supplier or shipment.
For example, suppose a European importer purchases 30 tonnes of covered steel goods from one Indian company and 35 tonnes from another.
Its combined imports would amount to 65 tonnes during the calendar year, exceeding the 50-tonne threshold.
Both Indian suppliers may therefore receive requests for emissions information even though each individually supplied less than 50 tonnes.
Exporters should confirm the applicable position with their European customers before assuming that small shipment volumes mean CBAM is irrelevant.
CBAM was introduced in stages to give businesses time to understand emissions reporting and establish the necessary systems.
The transitional phase began on 1 October 2023 and continued until 31 December 2025. During this period, reporting declarants submitted quarterly emissions reports without purchasing CBAM certificates.
The definitive phase began on 1 January 2026.
The important milestones are:
Although the first annual filing deadline falls in 2027, the information relates to products imported during 2026.
This means manufacturers need production and emissions records covering the relevant period, rather than attempting to recreate information when the filing deadline approaches.
One of the most important aspects of CBAM readiness is calculating the greenhouse gas emissions embedded in covered products.
These calculations are different from preparing a general sustainability report or calculating a company’s overall carbon footprint.
A corporate greenhouse gas inventory may measure emissions across the organisation. CBAM requires emissions information associated with defined goods, installations and production processes under specific EU calculation rules.
For an Indian manufacturer, this means identifying the emissions generated during production and determining how those emissions should be allocated to the relevant products.
Direct emissions arise from activities and processes within the relevant manufacturing installation.
Depending on the industry, these may include fuel combustion in furnaces, boilers and other production equipment, along with chemical or industrial process emissions.
For example, a manufacturer using natural gas or coal in a production furnace must determine the relevant fuel consumption and emissions associated with the covered production process.
The company may already maintain fuel purchase records and daily consumption registers. However, those records need to be connected with the correct manufacturing activities.
If the same furnace or utility system supports multiple product lines, emissions allocation must follow the applicable methodology.
Simply dividing the factory’s total annual fuel consumption by total production may not always produce a compliant result.
Indirect emissions are associated with electricity used during manufacturing.
Electricity consumption is particularly relevant for manufacturers operating electric furnaces, processing equipment, casting units and other energy-intensive machinery.
A simplified calculation multiplies electricity consumed by an applicable emissions factor.
However, CBAM rules specify how relevant emissions factors must be determined and whether indirect emissions are included in a particular product’s CBAM calculation.
Under the current definitive framework, indirect emissions are included for certain sectors, including cement and fertilisers, while the treatment differs for other covered sectors.
Therefore, exporters should not automatically add electricity emissions to every CBAM product calculation.
Even where electricity emissions are outside the current CBAM calculation scope, electricity monitoring remains useful for energy management and broader greenhouse gas reporting.
Many manufacturers purchase materials from other companies before converting them into finished products.
Under CBAM, certain input materials are treated as relevant precursors. Their embedded emissions must be included when calculating emissions for applicable complex goods.
Consider an Indian company manufacturing steel components from steel purchased from two different producers.
The component manufacturer may know how much electricity and fuel it consumes, but it also needs appropriate emissions information for the relevant steel precursor materials.
If those suppliers use different manufacturing technologies, their emissions intensity may be different.
This makes supplier data collection an important part of CBAM reporting.
Alongside emissions information, manufacturers need accurate records of production quantities and material consumption.
A factory producing several product categories may require separate calculations or appropriately defined product groupings under the applicable methodology.
Product quantities, manufacturing periods, raw-material consumption and output records should therefore be consistent.
For many CBAM goods, emissions intensity is expressed in tonnes of CO2 equivalent per tonne of product, although specific functional-unit provisions apply to certain goods.
A reliable calculation should allow a reviewer to trace the final emissions figure back to the underlying production information.
For many Indian exporters, obtaining supplier information is more difficult than collecting data from their own factory.
An aluminium product manufacturer may purchase aluminium from multiple smelters. A steel component manufacturer may source material from different mills depending on availability and pricing.
These suppliers might use different fuels, technologies and production processes.
As a result, relying on one general emissions figure for all incoming materials may not represent the actual emissions associated with the products.
Exporters should identify suppliers of relevant precursor materials and request installation-specific information where required.
Useful supplier information may include production quantities, the relevant manufacturing installation, embedded emissions intensity, the calculation period, methodology and verification details.
A supplier’s general ESG report is not necessarily sufficient.
For example, a company may report an annual organisational carbon footprint of 25,000 tonnes of CO2 equivalent. This figure alone does not establish the embedded emissions associated with a specific tonne of steel supplied to a customer.
The exporter needs information that can be applied to the relevant precursor under CBAM rules.
Businesses purchasing materials from multiple suppliers should also establish a consistent method for recording material receipts and identifying the source of each input.
Where required, embedded emissions from multiple precursor installations must be combined using the applicable calculation methodology.
CBAM readiness becomes easier when responsibilities are distributed across the right departments.
The export team understands the products and customers. The production team maintains operational data. Procurement manages supplier information, while the sustainability or compliance team can coordinate emissions calculations.
A practical preparation process involves the following steps.
Begin by reviewing products exported to the European Union.
Identify the relevant EU CN codes and compare them with the current CBAM product list.
Where classification is unclear, obtain appropriate customs classification advice before beginning detailed emissions calculations.
Prepare a manufacturing process flow showing how raw materials enter the plant and how finished products are produced.
Identify major equipment, fuel-consuming processes, electricity use and relevant precursor inputs.
This creates the foundation for deciding which emissions and production records are required.
Collect information from production records, utility meters, fuel registers and material consumption reports.
Review whether the data covers the required reporting periods and whether records can be reconciled with actual production.
Missing meter readings, inconsistent production quantities and unclear fuel allocations should be investigated before finalising calculations.
Contact suppliers of relevant precursor materials and explain the required information.
Request installation-specific emissions data where necessary and establish a process for reviewing and updating supplier submissions.
Companies should not assume that every supplier already understands CBAM requirements.
Calculate the relevant direct and, where applicable, indirect emissions in accordance with the EU methodology.
Include embedded emissions from relevant precursors and apply the required allocation rules.
Maintain calculation files, supporting records and explanations of assumptions.
Where actual emissions are used under the definitive regime, they require verification by an appropriately accredited CBAM verifier.
Once the required information is prepared and verified, the manufacturer can share it with the responsible EU declarant through an agreed method or the relevant CBAM Registry functionality.
The following case study is illustrative. The company, figures and calculations are examples created to explain the process, not actual client results.
A steel components manufacturer in western India was preparing documentation for a European customer.
During one production period, the company purchased 200 tonnes of steel precursor material from two suppliers.
Supplier A delivered 120 tonnes, while Supplier B delivered 80 tonnes.
The company had production records and emissions information from Supplier A, but Supplier B had not provided the required installation-level emissions data.
This meant that 80 tonnes, or 40% of the relevant precursor material, lacked the supporting emissions information needed for the intended actual-emissions calculation.
The manufacturer’s compliance team contacted Supplier B and requested production-specific emissions information.
For this illustration, assume the suppliers subsequently provided eligible, appropriately verified precursor intensities of:
| Supplier | Material supplied | Illustrative emissions intensity |
|---|---|---|
| Supplier A | 120 tonnes | 1.9 tCO2e/tonne |
| Supplier B | 80 tonnes | 2.3 tCO2e/tonne |
Using a simple mass-weighted average:
(120 × 1.9 + 80 × 2.3) ÷ 200 = 2.06 tCO2e per tonne of precursor.
This calculation illustrates how supplier data affects the weighted emissions intensity of incoming material.
It is not the final CBAM emissions intensity of the finished steel product. That calculation must also address the manufacturer’s applicable production emissions, output quantities, relevant material balances and the requirements of the EU methodology.
The case study highlights a common business issue: a factory may have complete records of its own operations while still having gaps in the supplier information required for CBAM.
Building a structured supplier information system can help prevent these problems from recurring.
Under the definitive CBAM regime, EU declarants may use actual verified emissions or applicable default values prescribed by the European Commission.
Actual emissions calculations are based on production information prepared using the required methodology.
Default values are established by the European Commission and may be used under the applicable rules.
For some manufacturers, verified actual emissions may be lower than the relevant default values. This can make accurate data collection commercially useful.
However, lower emissions cannot simply be claimed based on a factory’s energy-saving investments or sustainability commitments.
They must be supported by acceptable calculations and independent verification.
The formal verification must be carried out by a verifier accredited for CBAM activities by an EU national accreditation body.
A general ISO certification or corporate sustainability audit does not automatically replace this requirement.
For exporters, verification planning should begin early enough to address missing records, calculation questions and supplier-data discrepancies.
Businesses preparing for CBAM should pay attention to a few recurring documentation and calculation problems.
Incorrect product classification can lead to errors in determining whether a product is covered. EU CN codes should be reviewed carefully.
Using company-wide carbon footprint figures instead of the required product-level calculation can produce unsuitable emissions information.
Ignoring relevant precursor emissions can result in incomplete calculations, particularly where production depends on externally sourced materials.
Inconsistent factory records can make it difficult to reconcile emissions with production quantities.
Assuming all sustainability certificates satisfy CBAM verification requirements may also create problems when the EU buyer needs verified actual emissions.
Most of these problems become easier to manage when companies maintain a clear monitoring plan and review information regularly rather than waiting for a customer request.
Before sharing emissions information with a European customer, a manufacturer should review its preparation status.
A documented internal review can help management identify what information is available, what remains missing and which department is responsible for completing the work.
No. The requirement to obtain authorisation as a CBAM declarant generally applies to the responsible EU importer or indirect customs representative, subject to the relevant rules and exemptions. Indian installation operators can use the designated non-EU operator facility to support emissions-data sharing.
The statutory CBAM certificate purchase and surrender obligations generally rest with the authorised EU declarant. However, contractual arrangements between buyers and suppliers may influence how carbon-related costs are commercially allocated.
The EU declarant may use applicable prescribed default values instead of actual verified emissions. Exporters should discuss this choice with their European customers because it can influence the emissions figures used for CBAM purposes.
Not necessarily. A corporate carbon footprint can provide useful data, but CBAM requires calculations based on specific production boundaries, product categories and methodologies.
Manufacturers supplying covered goods should already be maintaining the relevant 2026 production information. The first annual CBAM declaration covering 2026 imports is due on 30 September 2027, so data collection and verification arrangements should not be left until the reporting deadline.
For Indian manufacturers, CBAM compliance involves more than preparing another sustainability document.
The process requires coordination between production teams, procurement departments, export managers and emissions specialists.
Green Permits Consulting supports businesses with sustainability and regulatory advisory services.
A CBAM readiness assessment can help identify covered products, review available emissions records, evaluate supplier information gaps and develop a practical documentation process.
Depending on the requirement, advisory support may also include emissions calculation assistance, monitoring documentation and preparation for independent verification.
Businesses looking for broader guidance can explore Green Permits’ CBAM compliance consulting services.
CBAM readiness for Indian exporters is becoming an important part of supplying carbon-intensive products to European markets.
Manufacturers need to understand which products are covered, maintain reliable emissions records and obtain the relevant information from suppliers.
The transition from basic reporting to the definitive CBAM framework has made accurate, verifiable production data more important for EU importers.
Indian businesses that develop structured monitoring, supplier-data and verification processes will be better prepared to respond to their European customers’ requirements.
The starting point is a practical assessment of existing records, missing information and the steps needed to complete the emissions calculation process.
Preparing emissions data and coordinating supplier information can be complex, especially for manufacturers managing several production processes or suppliers.
Green Permits Consulting can assist Indian exporters with CBAM readiness assessments, emissions documentation, supplier-data coordination and compliance advisory support.
📞 Phone: +91 78350 06182
📧 Email: wecare@greenpermits.in
🌐 Website: www.greenpermits.in
