Levying Border Adjustment Tax To Meet Green Commitments Morally Wrong, Says Finance Minister Nirmala Sitharaman

Finance Minister Nirmala Sitharaman on Thursday said any move on imposition of cross-border adjustment tax by developed countries to meet their green commitments is morally wrong and goes against the interest of developing countries of 'Global South'.

"The single mono-sided decision of imposition of border adjustment tax ...the logic just goes against the concern of the Global South...

"But cross-border imposition (of tax) and that money going towards somebody else's green agenda, if anything, is not moral at all," Sitharaman said at the CII Global Economic Policy Forum.

The minister said every country will need to generate resources to meet the green commitments made globally.

Her comments come in the backdrop of the European Union's announcement to impose carbon tax on imports from certain sectors.

The CBAM (Carbon Border Adjustment Mechanism) or carbon tax (a kind of import duty) will come into effect from January 1, 2026, but from October 1 this year, domestic companies from seven carbon-intensive sectors, including steel, cement, fertiliser, aluminium and hydrocarbon products, will have to share data with regard to carbon emissions with the EU.

Advocates for Renewable Energy Spread

In her address, Sitharaman said the base energy requirements of a country cannot be filled by renewable energy sources, but it is possible to think in terms of spreading renewable energy in such a way that individual participation is ensured.

India is rapidly moving in the renewable energy space, particularly in solar, and is in talks with many countries for a grid connectivity across the world by the ISA members.