India is seeking an exemption for its micro, small and medium enterprises (MSMEs) from the European Union's carbon tax, which will be implemented on October 1, 2023. During a meeting of all stakeholders, including top officials of various line ministries such as , business and power, as well as industry leaders from the private sector, a decision was made to assess the level of awareness and find a strategy to move forward. The ministry will also press the European Union to conclude an agreement on the mutual recognition of its carbon certificates. The official said the issue is being addressed bilaterally with the EU and multilaterally at the World Trade Organization as well as other forums. At the bilateral level, India is asking the EU to conclude a mutual recognition agreement and exempt MSMEs in the country. next India's own Carbon Credit Trading System (CCTS) guidelines are being developed by the Ministry of Power. The introduction of India's own carbon tax would help Indian exporters reduce the burden of carbon taxes. The European Union is introducing a Carbon Border Adjustment Mechanism (CBAM) from 1 October 2023. CBAM would result in a 20-35 percent tax on selected EU imports from 1 January 2026. Domestic companies from seven carbon-intensive sectors, including steel, cement, fertilizers, aluminum and hydrocarbon products, will have to apply to EU authorities for certificates of compliance to meet CBAM standards. Developing countries like India will have to pay the highest taxes under the Carbon Border Tax (CBT), according to a report by economic think tank GTRI. The think tank also warns that CBT will result in greater trade diversion and more trade between developed countries. GTRI founder Ajay Srivastava said that even if a product from India is cheaper than an American product, the tax plus the cost of the product would make Indian products more expensive. This would lead to EU firms sourcing more from developed countries, causing trade to shift to more expensive suppliers.