For India’s steelmakers, the European Union’s Carbon Border Adjustment Mechanism (CBAM) is no longer a distant policy concern. The system entered its definitive phase in January 2026, putting the carbon intensity of exported steel firmly on the industry’s balance sheet. The focus is now shifting from the potential impact of CBAM to how Indian steelmakers can adapt to it.

A new analysis by climate think tank Sandbag argues that the impact could be substantially smaller than feared if Indian producers make strategic changes to where and how they produce steel. Its modelling suggests that, under an “expected” scenario, total CBAM costs for India’s steel exports could fall from 762 million Euro to around 79 million Euro as exporters optimise low-emission production. Under a more ambitious scenario involving new low-emission capacity, the modelling puts the sector at a potential 44 million Euro net benefit.

The Impact Is Already Showing Up in Trade

There are early signs of pressure on India’s steel exports to Europe.

India’s iron and steel exports to the EU fell 13% in the four months through April 2026 following the rollout of CBAM, according to Department of Commerce data cited by ICRIER. A June 2026 ICRIER study estimated that India’s steel exports to the EU could eventually fall by 24% because of CBAM.

However, the decline cannot be attributed to CBAM alone. Steel exports are also influenced by global prices, demand, freight costs and trade measures. The significance for Indian mills is therefore not just the possibility of selling fewer tonnes. Higher carbon-related costs could also squeeze margins or make Indian steel less competitive against lower-emission producers.

This is where the Sandbag analysis offers a different perspective. Its modelling suggests that Indian steelmakers can reduce their exposure by changing what they produce, where they sell it and how quickly they lower emissions.

First: Stop Treating Indian Steel as One Block

India’s steel industry is not uniformly high-emission. Different plants and production routes have different carbon intensities. That matters because CBAM does not simply impose the same burden on every tonne of steel. The emissions embedded in production determine the exposure.

Sandbag identifies Indian steel plants whose emission intensity is already low enough to potentially benefit from CBAM. It specifically points to ArcelorMittal’s NS Hazira plant as an example of existing relatively low-carbon capacity that could serve European demand. For the industry, the first step is therefore to know where it stands.

Rather than approaching CBAM as a sector-wide penalty, steelmakers need to identify which plants, production lines and products have the lowest emissions and where those tonnes can earn the greatest value.

Send The Cleaner Tonnes to Europe

Immediate recommendation is strategic rather than technological: allocate lower-emission steel to the European market.

Report finds that Indian companies could reduce their CBAM liability by strategically reallocating low-emission output towards Europe. The same producers could also benefit from higher European steel prices, potentially offsetting the cost of CBAM certificates. That changes the way exporters need to think about their production portfolio.

If a company has several plants with different emissions profiles, sending the same type of steel to every market may no longer make commercial sense. Europe could increasingly become the destination for the cleaner end of the portfolio, while more carbon-intensive production faces greater pressure elsewhere. In effect, carbon intensity becomes another variable in export planning, alongside price, freight and demand.

Use Existing Low-Carbon Capacity Before Building from Scratch

India does not necessarily have to wait for a completely new generation of green-steel plants. Some relatively low-emission capacity already exists. Sandbag argues that this infrastructure can be leveraged to maintain Indian steel’s competitiveness in Europe, provided companies make the necessary operational adjustments.

That means the transition does not begin and end with new technology. Steelmakers can first examine how existing plants can be operated more efficiently, which products can be routed towards Europe and whether current capacity is ready for the reporting and verification requirements associated with CBAM.

For an industry under pressure to keep capital expenditure and production costs under control, that could be a more immediate route to reducing exposure.

Investment in New Low-Emission Capacity

The longer-term strategy is harder — and more expensive. Sandbag’s “ambitious” scenario assumes the deployment of new low-emission production capacity. Its modelling suggests that this could change the economics of CBAM enough to turn a net cost into a projected 44 million Euro net benefit.

This is where CBAM intersects with India’s larger steel decarbonisation challenge.

The industry is expected to expand significantly to meet domestic demand, but much of India’s steelmaking remains tied to coal-intensive production. Moving towards lower-emission technologies therefore requires substantial investment as well as changes in energy sources, raw materials and production processes.

For exporters targeting Europe, however, those investments could increasingly be viewed not simply as compliance costs but as a way of protecting market access.

Get The Carbon Numbers Right

There is another piece of groundwork that cannot be ignored: emissions measurement and reporting. CBAM effectively puts a carbon price on the emissions embedded in imported products. That means steelmakers need to know, and be able to demonstrate, the emissions associated with their production.

The Sandbag report itself flags “readiness for CBAM reporting” among the factors that will determine which existing low-emission facilities are best positioned to benefit. For Indian mills, reducing emissions without being able to credibly quantify them could limit the commercial advantage.

The carbon footprint of steel is therefore becoming part of the product information that exporters need to manage.

The Industry Cannot Rely on Cleaner Steel Alone

There is a catch. The Sandbag modelling does not suggest that CBAM will simply disappear as a problem for Indian steel. Its projected outcomes depend on producers responding appropriately — by optimising production, reallocating cleaner output and investing in low-emission capacity.

That makes the transition uneven. Companies with access to relatively low-emission plants, capital for technological upgrades and the ability to accurately measure emissions could be better placed than smaller or more carbon-intensive producers.

This could create a new fault line within India’s steel industry: not simply between large and small producers, but between those that can demonstrate lower-carbon production and those that cannot.

Europe May Become the Proving Ground

India has strongly opposed CBAM, calling it discriminatory and protectionist and questioning its compatibility with international trade principles. But whatever the broader policy dispute, Indian steelmakers now have to deal with the market reality. Europe is putting a price on carbon-intensive imports. At the same time, India is looking to strengthen its position in international steel markets.

That makes the European market a useful proving ground for India’s transition to cleaner steel. The Sandbag analysis suggests that Indian steelmakers have several levers to pull: identify their lowest-emission capacity, direct those tonnes towards Europe, improve operational efficiency, strengthen emissions reporting and invest in new low-emission production where commercially viable.

The opportunity is not guaranteed. Nor will every steelmaker benefit equally. But the takeaway is that CBAM does not have to be treated simply as a bill Indian-steelmakers must pay. For companies that can clean up production and put the right steel in the right market, it could become a competitive test they are capable of passing.

Maradu, Kerala, India — There is a Swap Shop beneath a highway flyover in this small municipality in southern India where nothing has a price. There are no tags, no billing counters and no advertisements. Instead, from 9.30 a.m. to 5.30 p.m. every day, people arrive carrying books they’ve finished reading, toys their children have outgrown, furniture that no longer fits their homes, and appliances that still work but are no longer wanted. By closing time, many of these items have found new owners, for free.

This is the Swap Shop, an initiative run by the local municipal government in Maradu, part of the Kochi metropolitan area in the southern Indian state of Kerala. It was inaugurated on May 28, 2026.Residents donate usable household items, and anyone who needs them can take them home at no cost.

Throughout the day, a steady stream of visitors passes through carrying clothes, toys, books, kitchen utensils, school supplies, furniture and electronics. Some come to give; others come to receive. People travel from towns like Kalamassery, Aluva, Pukkattupady, well beyond Maradu’s own boundaries to use the centre, making it a resource for a much wider community than the municipality it belongs to. Every donation and collection is logged in a register kept by the municipal office — a simple system built on accountability and trust rather than money.

Swap Shop Giving Everyday Objects a Second Life

The shelves at the Swap Shop tell small, ordinary stories: a baby cradle no longer needed because the child has grown; school textbooks that have served their purpose; a television replaced by a newer model; furniture left behind by a family moving house.

Elsewhere, these items might have ended up discarded or gathering dust in storage. Here, they usually find a new owner within days.

Beevi, who manages the centre daily, says that transformation is the most rewarding part of the work.

“Many people burn or throw away items they no longer need. Through this initiative, those things reach the people who can actually use them. In the hands of someone who needs them, everything has value,” she says. “Many families have benefited from it, and we continue to receive enquiries from people who want to donate or collect items.”

Part of a Bigger Waste Problem

The Swap Shop sits within a much larger challenge facing Kerala, a state of roughly 35 million people on India’s southwestern coast. Kerala has spent recent years overhauling its waste management systems, an effort that gained urgency after a major fire broke out in 2023 at Brahmapuram, one of the region’s largest waste dumping sites, near Kochi. The blaze burned for days and blanketed the city in smoke, becoming a flashpoint in the debate over how the state handles its garbage.

According to Kerala’s government-run Solid Waste Management Project, the state generates about 3.7 million tonnes of municipal solid waste a year, roughly 10,000 tonnes a day. Of that, large cities contribute around 1,415 tonnes daily, smaller municipalities like Maradu produce 4,523 tonnes, and rural village councils generate a further 4,106 tonnes.

Handling that volume requires more than better collection and processing systems. It requires reducing how much waste is generated in the first place, which is the gap initiatives like the Swap Shop are designed to fill. Environmental groups describe this approach as part of a “circular economy”: a model in which products are kept in use for as long as possible through sharing, repair and reuse, rather than being discarded and replaced.

A European Idea, Adapted Locally

Ajitha Nandakumar, the elected chairperson of Maradu Municipality, says the concept was inspired by community swap centres she had come across in several European countries.

“It follows a give-and-take policy. It promotes sustainability while helping reduce solid waste. Instead of throwing away usable items, people can donate them, and someone else who needs them can use them,” she says.

For the municipality, the Swap Shop is not just a waste-reduction tool. it’s also an attempt to shift how residents think about consumption. In a market where replacing an item is often cheaper and easier than repairing or sharing it, the Swap Shop offers a quiet alternative: a school bag, an iron, or a dining table doesn’t stop being useful just because one household no longer wants it.

Kochi’s broader sustainability push has largely focused on large infrastructure, waste treatment plants, cleaner public transport systems, and similar projects. But this small building beneath a flyover is a reminder that community-led, low-cost initiatives can play just as meaningful a role.

For the people who walk through its doors each day, an object’s worth isn’t measured by its age or its price tag, but simply by whether it can still be used.

Maradu is a municipality within the Kochi metropolitan area in the Indian state of Kerala

Kochi’s integrated public transport system has received global recognition for advancing sustainable urban mobility, with Kochi Metro winning the UITP Impact Award 2026 for successfully connecting multiple modes of public transport into a seamless network.

The award was presented at a ceremony in Brussels, Belgium, honoring Kochi Metro’s efforts to integrate its metro rail network with the Water Metro’s fleet of electric boats, creating one of the world’s few public transport systems that combines rail and inland water transport under a unified mobility framework.

At the heart of the recognition is Kochi’s commitment to reducing dependence on private vehicles by making public transport more accessible and convenient. The city’s mobility network links metro stations with electric feeder buses, while a digital mobility platform enables commuters to plan and access different modes of transport through a single system.

Kochi Metro: The multi-modal approach

Through this modal, passengers can move seamlessly between metro trains, electric boats and feeder buses, improving first- and last-mile connectivity while encouraging a shift towards cleaner modes of travel.

The award highlights how sustainable mobility extends beyond introducing low-emission transport. By integrating different services into a connected network, Kochi has sought to make public transport more efficient, reliable and attractive for daily commuters.

The UITP Impact Awards recognise public transport initiatives from around the world that demonstrate innovation, sustainability and improvements in passenger experience. Kochi Metro’s recognition underscores the growing international attention on integrated mobility solutions as cities look for ways to reduce transport-related emissions and build more sustainable urban transport systems.