A new report says green hydrogen could help India and Europe transform the EU’s Carbon Border Adjustment Mechanism (CBAM) from a trade challenge into a major clean-industry opportunity. Deeper India-EU cooperation could strengthen low-carbon manufacturing, energy security, trade competitiveness and clean technology supply chains.
Key Highlights
- Green hydrogen could turn CBAM into a clean-industry opportunity for India and Europe.
- CBAM’s definitive regime began on January 1, 2026, covering major carbon-intensive sectors.
- India aims to build 5 million tonnes per annum of green hydrogen capacity by 2030.
- India-EU cooperation could strengthen low-carbon manufacturing and clean technology supply chains.
New Delhi, Sept 04: The European Union’s Carbon Border Adjustment Mechanism (CBAM) could become an opportunity for deeper industrial cooperation between India and Europe rather than simply a trade challenge, according to a new report. The publication argues that green hydrogen can play a central role in building low-carbon industries, strengthening trade competitiveness and creating deeper India-EU clean technology and manufacturing value chains.
The report said India and the European Union are entering a period in which trade, industrial competitiveness and climate policy are becoming increasingly interconnected. CBAM, which entered its definitive regime on January 1, 2026, places a carbon cost on embedded emissions in imports across sectors including iron and steel, aluminium, cement, fertilisers, electricity and hydrogen. While the mechanism creates pressure on exporters to reduce carbon intensity, it could also encourage greater investment in cleaner industrial technologies.
The challenge is particularly significant for India because of the country’s ambitious industrial and infrastructure expansion plans. India’s National Steel Policy envisages crude steel capacity of 300 million tonnes and production of 255 million tonnes by 2030–31. The report argues that instead of expanding conventional carbon-intensive industrial capacity and retrofitting it later, India has an opportunity to increasingly develop clean industrial capacity from the beginning.
Green hydrogen could provide an important bridge between India’s industrial growth ambitions and Europe’s climate objectives. Hydrogen can replace fossil fuels in industrial processes that are difficult to electrify directly, particularly in sectors such as steel production. The report said India’s large renewable energy potential and expanding industrial base could support the development of new clean technology supply chains serving both domestic and European markets.
India is targeting 5 million tonnes per annum of green hydrogen production capacity by 2030. Progress is also being made in the domestic manufacturing ecosystem, with nearly 15 companies awarded 3,000 MW per year of electrolyser manufacturing capacity and 18 companies receiving incentives covering 862,000 tonnes per annum of green hydrogen production capacity.
The report said the success of an India-Europe clean industry partnership should ultimately be measured through tangible outcomes, including installed electrolysers, contracted green hydrogen volumes, commissioned hydrogen-based industrial plants and recognised carbon certificates. With stronger cooperation and continued investment, the energy transition could become a foundation for a cleaner and more competitive India-EU industrial relationship.
By combining India’s renewable energy potential with Europe’s clean technology and climate ambitions, green hydrogen could help transform CBAM into a catalyst for stronger India-EU industrial cooperation and low-carbon growth.
