The Indian manufacturing sector should aim for
export-led growth driven by climate-friendly processes and see regulations like
the Carbon Border Adjustment Mechanism (CBAM) as an
opportunity to have a global footprint, Jamshyd Godrej, Chairman, CII Sohrabji Godrej Green
Business Centre and Chairman, Godrej & Boyce told on
Wednesday.
Godrej, who has been one of the founding members of the centre, said
CBAM was a good idea for every country, asserting that it will encourage the
industry to improve on the sustainability front while giving protection against
cheap imports.
“What we are doing is we are giving protection
to Indian industry against cheap imports such as steel from China. But we are
not doing the other part. India should have something like CBAM. Anyone can
offer me a cheap product. But if our tariff regulations state that you can’t
just bring something cheap here. You
also must bring something which has a better carbon footprint, else pay higher
tariffs,” Godrej said.
CBAM is a carbon tariff imposed on
carbon-intensive products like steel, cement, and certain types of electricity
imported into the EU. It will come into effect from January 1, 2026. During the
trial period, which began on October 1, 2023, companies from seven
carbon-intensive sectors, including steel, cement, fertiliser, aluminium and
hydrocarbon products, have to share emissions data with the EU.
Godrej said there is a prevalent view that CBAM will be hit but he
believes it will be short term.
“When Europe thought of CBAM we should have also
thought of our own CBAM and gone in tandem. But it is not too late…, we should
also come up with a similar scheme which gives a boost to the Indian industry
to become more carbon neutral. They will benefit when they export and they will
build a climate resilient supply chain as well,” he said. He said once the leading players will reorient their manufacturing
with greener options, it is bound to have a domino effect on the supply chain.
“If a truck maker like Volvo says all the parts
that go into my manufacturing will be green, the supply chain would also
reimagine its business,” he said.
Godrej also talked about the slowdown in
consumption in the Indian economy and why it has come at the cost of putting
too much focus on building self-sufficiency.
“If we had export-led growth, the economy would be in a different situation
now. If given the right
policies, opportunities, and infrastructure, manufacturers can be big players
globally. That is where the growth will come from. The buying power in India
grows as a function of the GDP,” Godrej said.