09/05/25

EU: Indian minister slams European carbon taxes as ‘repeat of colonialism’

As published on: fdiintelligence.com, Friday 9 May, 2025.

Europe’s carbon taxes on high-emitting imports raise questions of “morality” and are a “repeat of colonialism”, India’s finance minister Nirmala Sitharaman said at the Asian Development Bank (ADB) annual meeting in Milan.

Her comments on a May 6 panel coincided with the country’s announcement that it had struck a free trade agreement (FTA) with the UK after three years of negotiations, despite not winning the exemption it sought from the UK’s incoming carbon tax.

The new tax, effective from 2027, follows in the footsteps of the EU’s Carbon Border Adjustment Mechanism (CBAM) by levying heavy-emitting imports to level the playing field between local companies, which pay a carbon price, and those from countries with laxer standards.

European policymakers herald these reforms as a way to lift sustainability standards abroad, but developing countries allege it is discriminatory, hindering their economic development and green transition.

“I find it [a] repeat of colonialism,” said Ms Sitharaman, likening it to the mentality of empire builders who exhausted the resources of their territories. “This should no longer be the spirit with which international co-operation, international trade, can happen.”

She said developing countries should be left to “green” themselves, but warned the West not to force them to do so after having “extracted” from them what they require for their “greening”. Her comments were met with applause from the audience.

Using the example of steel, of which India is the biggest source of imports into the EU, Ms Sitharaman suggested CBAM is a way to help fund the bloc’s development of its nascent green steel industry, for which it currently lacks the financial resources. “Once this side of the story gets greener, everything else that seems dirty won’t come into my country,” she said.

India has exemplified resistance from high-polluting emerging markets, which claim global sustainability standards penalise them for environmental damage mostly caused by advanced countries, while impeding their ability to support local development and provide basic services to their populations. The country was an instigator of COP’s coal commitments being termed as ‘phased down’ rather than ‘phased out’ back in 2021. Nonetheless, India is working to reduce its reliance on coal and cut its carbon dioxide emissions by 4 billion tonnes between 2020 and 2030. The country aims to install 500 gigawatts of non-fossil power capacity by 2030, and achieve net zero by 2070.

Ms Sitharaman stressed that import duties like CBAM can’t tackle a global phenomenon. “Climate doesn’t respect borders. Heat comes everywhere ... Seas rise everywhere. If our collective effort is to make the world greener, we have to get it everywhere,” she said.

Her comments came in response to a question on whether CBAM makes it more difficult for Asia and Europe to co-operate. While India didn’t win a carve-out from the UK’s carbon tax in their new FTA, the two governments have committed to continue bilateral talks on the matter.

Meanwhile India’s ongoing FTA negotiations with the EU are “top of our priority”, said Ms Sitharaman. “Except for one or two items, on which each side is fixated, there is largely an agreement that we can get through,” she said, with the goal of a deal by this December “not impossible to achieve”.

India’s recent focus on FTAs — having concluded deals with Australia and the UAE in 2022, and reportedly the nation closest to renegotiating its reciprocal tariffs with the US — underlines its approach to international economic relations.

“Global institutions are not carrying the heft they carried earlier. And if that is the situation, countries are very clearly looking at bilateral arrangements,” said Ms Sitharaman. “From this multilateral world, today you [need to] start having a bilateral mindset.”

Echoing comments by Italian government officials at the event, she stressed the need for countries to build self-reliance in core sectors. “There is no going back on globalisation. But being cautious that your dependencies should be largely addressed through your own capabilities” is something many countries, even in the Global South, are realising, she said.

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Carbon Tax India Europe