<h1>EU Carbon Border Adjustment May Cut India's GDP 0.02-0.03% by 2030 Without Domestic Carbon Tax</h1> India's GDP could decline by 0.02 to 0.03 percent between 2026 and 2030 due to the European Union's Carbon Border Adjustment Mechanism (CBAM) if implemented without a domestic carbon pricing system. The CBAM imposes a carbon price on imports from countries with lower environmental regulations, affecting key Indian export sectors such as iron and steel, aluminium, cement, and fertilisers. An analysis suggests that implementing a domestic carbon tax could offset much of the economic impact by retaining revenue within the country, supporting household consumption, and cushioning industry losses. A hybrid approach combining domestic carbon pricing with CBAM could balance revenue retention and reduce export declines. The study recommends using carbon tax revenues for green subsidies, industrial decarbonisation, and targeted compensation, while diversifying exports and improving energy efficiency to mitigate adverse effects on urban and rural households.