LKS International Trade Amicus - June-2025

EU simplifies CBAM but does not address the underlying issues

The European Council and the European Parliament recently 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. The article however notes that despite these internal simplifications, significant challenges persist for Indian exporters and other third-country suppliers navigating the EU's evolving carbon regulation landscape. The authors first discuss Omnibus-I and then highlight certain key issues that need to be addressed before the definitive phase of CBAM begins.