Industry vs Government: Perils of having differencing voices at global forums

At the COP28 summit in Dubai, Rajiv Mangal of Tata Steel and Seema Arora from the Confederation of Indian Industry (CII) expressed comfort with the European Union's Carbon Border Adjustment Mechanism (CBAM). This stance contrasts with the general industry and Government perception of CBAM in India.

Rajiv Mangal views CBAM as an incentive for emission reduction. "CBAM is good. It levels the playing field because it puts a price on carbon. It says that if you are emitting more, you pay more. And that's a good thing."

Seema Arora believes that CBAM can drive cleaner production practices in India. "I don't think there is any point in saying we can't accept it because it is not non-discriminatory. It's a reality, and we have to live with it. The best way to live with it is to make sure that our industries become more competitive, more efficient, and more sustainable."

No one should have any doubts that Indian industry and government wholeheartedly supports decarbonisation and global climate efforts. But CBAM is different. Most consider CBAM to be discriminatory unlilateral measure which does not stop entry of polluting steel only taxes it. CBAM should not be confused with decarbonisation.

While both officials have the liberty to voice their views, it is crucial for the sake of national interest that there be a unified voice at international forums. The differing stances of the Indian government and industry leaders on CBAM could weaken India's position in global discussions on climate and trade.

It's important to remember that government policies are often shaped by industry inputs. The steel industry has urged the government to challenge CBAM at the World Trade Organization and to negotiate with the EU for deferment or exemption. If industry leaders present different narratives at domestic and international forums, it could lead the government to overlook their requests in future.