<h1>Carbon border adjustment impact mitigated by domestic carbon tax; domestic revenue retention reduces economic loss.</h1> The EU's Carbon Border Adjustment Mechanism on carbon intensive imports risks revenue outflows and reduced household consumption in India, concentrated in iron and steel, aluminium, cement and fertilisers. A domestic carbon tax that retains revenue domestically largely offsets those losses by funding targeted household compensation, green subsidies and industrial decarbonisation. A hybrid approach halves rates and splits revenue retention, while the CBAM only scenario yields the largest external revenue transfer and welfare impact.