EU Simplifies CBAM But Does Not Address The Underlying Issues

On 18 June 2025, the European Council and the European Parliament reached a provisional agreement on the Omnibus-I legislative package: which seeks to simplify the European Union's Carbon Border Adjustment Mechanism (CBAM). Omnibus-I aims to reduce the compliance burden on European importers, particularly small and medium-sized enterprises (SMEs) and simplify CBAM mechanism for them. However, despite these internal simplifications, significant challenges persist for Indian exporters and other third-country suppliers navigating the EU's evolving carbon regulation landscape. Further, Omnibus-I does not address the underlying issues at the heart of CBAM reporting, which begs the question whether the European Commission is even aware of the evolving ground realities. We first discuss Omnibus-I and then highlight certain key issues that need to be addressed before the definitive phase of CBAM begins.