Assessing the susceptibility of India’s energy-intensive and mining-dependent industries to EU climate regulations
Year: 2025
Type: article
Abstract: The 2026 Carbon Border Adjustment Mechanism (CBAM) introduction will challenge Indian industries exporting to the European Union (EU), especially high-energy-consuming sectors like steel, aluminium, coal, fertilizer, automobiles, organic chemicals, polymers, and cement. This study assesses their vulnerability to increased EU carbon taxes, categorizing them into mining and non-mining sectors, analysing the impact of energy price fluctuations on profitability, expenses, workforce, investments, and exports. It performs a panel fixed-effects regression analysis utilizing firm level data from CMIE prowess. Results indicate that in the short term, non-mining sectors face greater competitiveness challenges. A 10% fuel cost increase leads to a 3.35% profit decline in non-mining and a 0.9% reduction in mining sectors. Non-mining exports decrease by 4.84%, while mining sees a 2.03% decline, benefitting from better energy access. Medium and large enterprises experience 2.9% and 2.6% profit declines, and large corporations face a 5.6% drop in exports. Sectors like automobiles, cement, fertilizer, and organic chemicals witness profit reductions of 6.7%, 6.6%, 3%, and 3.3%, respectively. Raw material expenses decrease by around 5% for coal-related firms. In summary, non-mining sectors and larger enterprises are more sensitive to fuel price fluctuations. Among sectors, the cement industry is most vulnerable to carbon taxes due to its high energy dependence.
Source: Sustainable Futures
Authors: Cheshta Grover, Ram Ranjan
Institution: Shiv Nadar University
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: gold
Estimated APC paid: $2,340
OpenAlex ID: W4410246482