An Indian engineering exporter receives an urgent email from its European buyer.

The buyer wants the EU CN code, production quantity, manufacturing-installation details, electricity consumption, fuel data, precursor information and embedded emissions calculation within 10 working days.

The export team has the invoice and Indian HS code. The plant team has monthly electricity bills. Finance has fuel invoices. Procurement has records of steel and aluminium purchases.

However, nobody has connected this information to the exact product supplied to the EU customer.

This is the real challenge created by future EU compliance rules. The exporter may have the data somewhere in the company, but the information is often spread across 5 or 6 departments and has never been organised for product-level carbon reporting.

CBAM has now entered its definitive phase. The EU importer normally manages the formal declaration and certificate obligation. The Indian exporter must support that process with accurate, traceable and verification-ready factory information.

What Future EU Compliance Rules Mean for Indian Exporters

The Carbon Border Adjustment Mechanism creates a carbon-related compliance obligation for selected goods imported into the European Union.

It is designed to apply a carbon cost to covered imports that reflects the carbon-cost system faced by producers operating inside the EU.

For an Indian exporter, CBAM is not simply an environmental-reporting exercise. It connects 4 important business areas:

• Customs classification
• Factory production information
• Carbon emissions
• EU customer requirements

An exporter may be manufacturing a high-quality product and meeting every Indian environmental approval, but it can still face difficulties if it cannot provide the information required by its European buyer.

A typical CBAM-ready exporter should be able to identify:

• The product supplied
• The Indian ITC HS code
• The corresponding EU CN code
• The manufacturing installation
• The production route
• The reporting period
• The production quantity
• The direct emissions
• The applicable indirect emissions
• The embedded emissions of relevant precursors
• The supporting documents behind every important figure

The objective is not to produce a general corporate carbon number. The objective is to calculate and support the emissions connected with a specific category of goods manufactured at a specific installation.

Who Is Covered Under CBAM

CBAM currently applies to selected products in 6 broad groups:

• Iron and steel
• Aluminium
• Cement
• Fertilisers
• Hydrogen
• Electricity

This does not mean that every company working with these materials is automatically covered.

A manufacturer may produce 20 different engineering components using steel, but only some of those products may fall under a CN code included in the current CBAM list.

For example, some fasteners, tubes, containers, structures and fabricated articles may be covered. Other machinery parts, assembled products or finished goods may fall outside the current list.

The legal test is the EU CN code used when the product enters the European Union.

An exporter should therefore avoid statements such as:

• We are an engineering company, so CBAM does not apply.
• Our product contains steel, so CBAM definitely applies.
• Our buyer has ordered only a small quantity, so it is exempt.
• We use the same 8-digit code in India, so no further classification is required.

Every product should be screened individually using its composition, function, design, manufacturing process and customs description.

The 50-Tonne Threshold Explained

The simplified framework introduced a 50-tonne annual net-mass threshold for the main mass-based CBAM sectors.

The threshold generally applies at the level of the EU importer. It is not calculated separately for each Indian exporter.

Consider a European importer purchasing covered steel products from 4 Indian suppliers:

• Supplier A – 18 tonnes
• Supplier B – 12 tonnes
• Supplier C – 15 tonnes
• Supplier D – 11 tonnes

The total annual covered quantity is 56 tonnes.

Even though no single supplier crossed 50 tonnes, the importer may cross the annual threshold because its imports are aggregated.

This is why an Indian exporter should not independently tell a buyer that a shipment is exempt. The exporter may not have visibility over the buyer’s total covered imports from other countries and suppliers.

Electricity and hydrogen are treated differently and are not covered by this mass-based exemption in the same way.

Indian HS Code Versus EU CN Code

India and the European Union both use the international Harmonized System as the foundation for customs classification.

The first 6 digits are based on the international HS structure. After those 6 digits, India and the EU may apply different extensions.

India commonly uses the ITC HS classification.

The European Union uses:

• An 8-digit Combined Nomenclature code
• A 10-digit TARIC code where further customs detail is required

CBAM applicability is determined using the EU CN code stated in the applicable regulation.

This creates a practical risk. An Indian exporter may copy its 8-digit ITC HS code into a buyer questionnaire even though the equivalent EU classification is different.

A proper screening should review:

• Product name
• Technical specifications
• Material composition
• Primary function
• Manufacturing process
• Indian ITC HS code
• EU CN code
• TARIC classification
• Product-specific exclusions
• Any description beginning with “ex”

The term “ex” is particularly important. It can mean that only a specific part of a wider customs heading is covered.

EU Importer and Indian Exporter Responsibilities

The EU importer, or its authorised indirect customs representative, normally acts as the authorised CBAM declarant.

The declarant is generally responsible for:

• Maintaining the CBAM account
• Importing covered goods
• Submitting the annual declaration
• Reporting the quantity of covered goods
• Reporting embedded emissions
• Holding or purchasing CBAM certificates
• Surrendering the required certificates
• Maintaining declarant-level records

The Indian exporter normally does not purchase CBAM certificates directly.

However, the exporter may still be responsible under its commercial agreement for providing accurate product and factory data.

The Indian exporter may need to provide:

• Legal name of the manufacturing installation
• Installation address and coordinates
• Product description
• EU CN code
• Reporting period
• Production quantity
• Production route
• Fuel consumption
• Process emissions
• Electricity consumption
• Precursor-material quantities
• Precursor embedded emissions
• Product-specific emissions intensity
• Monitoring methodology
• Verification report
• Supporting evidence

In practical terms, the EU importer files the declaration, but the Indian plant supplies much of the information required to prepare it.

Data Required From the Factory

Factory-level data is the foundation of embedded emissions reporting.

The company should begin by identifying which installation manufactured the goods. Data from one plant should not be used automatically for goods manufactured at another location.

The exporter should then define the relevant production process.

For a steel or aluminium component, the process may include cutting, heating, forming, casting, rolling, machining, welding, coating or other activities.

The data required will depend on the product and methodology, but it may include:

• Total production during the reporting period
• Production of the relevant CBAM goods
• Natural gas consumed
• Coal or coke consumed
• Furnace oil or diesel consumed
• Process-specific raw materials
• Electricity consumed
• Steam consumed
• Carbon-containing materials
• Process emissions
• Purchased precursor quantities
• Supplier emissions declarations
• Waste gases
• Scrap generated and reused
• Meter readings
• Calibration records

Supporting documents may include:

• Electricity bills
• Fuel invoices
• Production registers
• ERP reports
• Meter logs
• Weighbridge records
• Purchase invoices
• Supplier declarations
• Laboratory reports
• Process-flow diagrams
• Internal calculation sheets

The key requirement is traceability. A verifier or buyer should be able to understand where each figure came from and how it was used.

Embedded Emissions Calculation Process

The calculation should begin only after the product and EU CN code have been confirmed.

The next step is to define the manufacturing installation and the production-process boundary.

For a simple good, the calculation may focus mainly on the emissions attributed to the relevant production process divided by the quantity produced.

For a complex good, the calculation may also require emissions from relevant precursor materials.

A practical process includes the following stages:

1. Confirm the EU CN code.
2. Identify the manufacturing installation.
3. Define the reporting period.
4. Map the production route.
5. Identify direct emission sources.
6. Determine whether indirect emissions apply.
7. Collect production and activity data.
8. Identify relevant precursors.
9. Obtain supplier information.
10. Apply the required calculation methodology.
11. Complete internal review.
12. Prepare for verification.

A calculation workbook alone is not enough. The workbook should be supported by a monitoring plan, evidence folder and internal review process.

Direct, Indirect and Precursor Emissions

Direct emissions are emissions released directly from the manufacturing process or from fuels used within the installation.

Examples may include emissions from:

• Natural-gas combustion
• Coal combustion
• Coke consumption
• Furnace oil
• Chemical reactions
• Carbon-containing process materials

Indirect emissions are associated with electricity consumed during production.

Whether indirect emissions are included depends on the relevant product category and the applicable CBAM rules.

Precursor emissions arise from materials used to manufacture a complex product.

For example, a fabricated-steel product may require information about the quantity and embedded emissions of the steel used as an input.

The exporter may need to know:

• Who manufactured the precursor
• Where it was manufactured
• Which production route was used
• How much precursor was consumed
• The precursor’s specific embedded emissions
• Whether actual or default values were applied

This is why procurement becomes a major part of CBAM readiness. A company cannot always complete its product calculation using only its own electricity and fuel data.

Actual Data Versus Default Values

The EU framework allows the use of actual emissions data or applicable official default values, subject to the relevant conditions.

Actual data may provide a commercial advantage where an Indian factory has lower emissions than the applicable default.

However, actual data requires stronger documentation.

The exporter may need:

• A compliant monitoring approach
• Reliable activity data
• Process-level allocation
• Supplier information
• Internal controls
• Accredited verification

Default values can simplify the calculation where actual data is unavailable.

However, default values should not be treated as numbers that the exporter can estimate independently. The correct official value depends on the product, country, production route and applicable methodology.

An exporter should compare both options before making a commercial decision.

For example, if the official default value is materially higher than the factory’s verified actual value, investing in actual-data reporting may reduce the buyer’s expected carbon exposure.

CBAM certificate prices are not fixed permanently.

The published price for the first quarter of 2026 was approximately EUR 75.36 per certificate. The second-quarter price was approximately EUR 75.28.

This shows why exporters should avoid inserting one fixed carbon price into a 3-year or 5-year supply contract without a review mechanism.

EU Buyer Questionnaire Response Process

EU buyer questionnaires should be handled as controlled compliance documents.

They should not be completed casually by one employee using estimates collected over email or phone calls.

The first step is to identify exactly what the buyer is requesting.

The buyer may want:

• Product applicability confirmation
• EU CN code
• Installation details
• Actual emissions
• Default-value confirmation
• Operator communication template
• Verification report
• Product carbon footprint
• Supplier decarbonisation information

The exporter should then assign one internal owner.

A strong questionnaire-response process should include:

1. Reviewing the buyer’s request.
2. Confirming the product and reporting period.
3. Identifying the manufacturing installation.
4. Collecting data from each department.
5. Checking calculations and evidence.
6. Approving the final response.
7. Recording the submitted version.

Every submission should have:

• A document date
• A reporting period
• A version number
• A preparer’s name
• A reviewer’s name
• A supporting evidence folder
• A record of what was shared with the buyer

This prevents different customers from receiving inconsistent numbers for the same product and reporting period.

Internal Responsibility of Business Teams

CBAM cannot be managed by the ESG department alone.

The export team understands customers, purchase orders, destination countries and shipment volumes.

The customs team understands classification.

The plant team understands processes, machinery, fuel and production data.

Finance controls invoices and accounting records.

Procurement manages precursor suppliers.

The sustainability team understands emissions calculations and verification.

A clear responsibility structure may look like this:

Export and Commercial Team

The export team should identify which EU customers require carbon information and which products are being supplied.

It should also maintain records of:

• Buyer name
• EU destination
• Product
• Quantity
• Shipment date
• Buyer deadline
• Questionnaire status

Customs and Classification Team

The customs team should confirm the mapping between the Indian ITC HS code and the EU CN code.

The classification should be supported by technical information, not only the commercial invoice description.

Plant and Utility Team

The plant team should collect monthly production, electricity, fuel, meter and process data.

It should also identify where sub-metering or allocation methods are needed.

Procurement Team

Procurement should issue standard data requests to steel, aluminium, fertiliser or other relevant precursor suppliers.

Supplier contracts may also need clauses requiring emissions information.

Finance Team

Finance should preserve fuel bills, electricity invoices, purchase records and payment evidence.

It should also consider how carbon-related cost changes may affect quotations and customer contracts.

ESG and Compliance Team

The ESG team should manage the monitoring plan, emissions calculation, evidence register, internal review and verification process.

Senior Management

Senior management should approve the responsibility structure and ensure that departments provide data on time.

Compliance and Commercial Risks

CBAM risk is not limited to government penalties.

For Indian exporters, the immediate impact may be commercial.

Incorrect Classification

An incorrect EU CN code may result in a product being wrongly treated as covered or not covered.

This can create confusion during customs clearance, buyer reporting or supplier audits.

Missing Precursor Data

A factory may calculate its own fuel and electricity emissions correctly but still have an incomplete result because supplier data is missing.

Unsupported Calculations

An emissions figure may appear reasonable but still fail review if the supporting meter records, invoices and allocation methods are unavailable.

Buyer Rejection

A buyer may reject a data pack that is incomplete, inconsistent or unsupported.

This does not mean every data error will stop customs clearance, but it can trigger further questions and escalation.

Delayed Purchase Orders

Some EU buyers may make carbon-data submission part of vendor approval or purchase-order release.

A delayed response can therefore affect order timing.

Higher Estimated Carbon Exposure

Where actual data is unavailable, the importer may use the applicable official default value.

If that default is higher than the factory’s real emissions performance, the product may appear more carbon-intensive than it actually is.

Verification Failure

A verifier may raise issues where:

• Production data cannot be reconciled
• Meter records are incomplete
• Precursor evidence is missing
• Allocation methods are unsupported
• Different departments provide different figures

Supplier Delisting

An EU buyer may prefer suppliers that can provide reliable data within fixed timelines.

The exporter may lose future business even where no direct legal penalty is imposed on the Indian company.

Illustrative Business Case Study

Indian Fabricated-Steel Exporter Supplying Germany

An Indian manufacturer exports fabricated-steel brackets and assemblies to a German industrial-equipment company.

The exporter supplies approximately 4,800 tonnes of goods to European customers each year from 2 manufacturing plants.

The German buyer requests product classification, installation data and embedded emissions information for its 2026 imports.

The request must be completed within 12 working days.

The export team initially assumes that the product is outside CBAM because the company purchases finished steel rather than manufacturing primary steel.

However, the product description on the invoice is too general to support that conclusion.

The company reviews the drawings, product function, steel composition and EU customs description. It finds that one product category may fall within a covered CN heading, while another similar-looking component falls outside the current list.

The review identifies 4 major data gaps:

• No confirmed EU CN code
• No production-level electricity allocation
• No precursor-emissions declaration from the steel supplier
• No controlled calculation workbook

The company then creates a corrective plan.

It maps both manufacturing plants separately, collects 12 months of electricity and fuel data, reconciles production quantities with ERP records and issues a standard data request to its steel suppliers.

The company also creates a controlled evidence folder containing:

• Monthly electricity bills
• Fuel invoices
• Production reports
• Material purchase records
• Process-flow diagram
• Supplier declarations
• Calculation methodology
• Internal review checklist

The final buyer response clearly identifies which product is covered, which installation manufactured it and which values are actual or default.

Commercial Lesson

The company’s main problem was not a lack of environmental commitment.

The problem was that classification, production and supplier information had never been connected in one repeatable compliance process.

Exporter Timeline

The following timeline is an internal readiness plan. It is not a separate legal deadline for Indian exporters.

Step	Responsible Team	Recommended Timeline	Data or Documents	Risk of Delay
Prepare EU product register	Export team	Before quotation	Product, buyer, quantity and destination	Covered products may be missed
Complete CN-code screening	Customs team	Before first shipment	Specifications, drawings and classification	Incorrect applicability conclusion
Map manufacturing installation	Plant and ESG	Before data collection	Address, coordinates and process flow	Wrong factory data may be used
Begin monthly data capture	Plant, finance and utilities	Every month	Fuel, electricity and production data	Evidence may be unavailable later
Request precursor data	Procurement	Quarterly or before year-end	Supplier declaration and material quantity	Default values may be required
Reconcile data	Finance and plant	Monthly or quarterly	ERP, invoice and meter records	Inconsistent totals
Prepare emissions calculation	ESG team	After reporting-period close	Calculation workbook and monitoring plan	Buyer submission may be delayed
Complete internal review	Compliance and management	Before verification	Evidence register and review checklist	Errors may reach the verifier
Complete verification	ESG and verifier	Before buyer filing	Operator report and evidence	Actual values may not be accepted
Submit buyer data pack	Export and ESG	Internal target before 30 June	Final verified information	Buyer may face September deadline pressure
Retain records	Document-control team	Minimum required period	Data, calculations and evidence	Audit trail may be lost

Factory operators should maintain complete supporting records for at least 6 years after the relevant reporting period.

The authorised CBAM declarant has a separate record-retention obligation, generally covering 4 years for key declaration and supporting records.

Data Readiness Table

Data Category	Commonly Available	Commonly Missing	Owner	Corrective Action
Product description	Invoice description	Detailed technical description	Export team	Create controlled product master
Indian classification	ITC HS code	Confirmed EU CN code	Customs team	Complete CN-code screening
Installation details	Factory address	Coordinates and installation profile	Plant team	Prepare installation data sheet
Production quantity	ERP report	Product-level reconciliation	Plant and finance	Reconcile monthly output
Fuel consumption	Purchase invoices	Process-level allocation	Utilities team	Introduce meters or allocation method
Electricity use	Monthly bill	Production-route allocation	Utilities team	Establish sub-metering
Precursor materials	Purchase quantity	Supplier emissions information	Procurement	Issue supplier questionnaire
Direct emissions	Partial fuel data	Final attributed emissions	ESG and plant	Apply approved methodology
Indirect emissions	Electricity quantity	Applicable emission factor	ESG team	Confirm regulatory treatment
Product emissions intensity	Internal estimate	Reviewed and verified value	ESG team	Complete calculation and verification
Supporting documents	Bills and registers	Central evidence index	Document control	Create structured repository
Verification	Previous ESG audit	CBAM-specific verification	Management	Appoint suitable verifier

Regulatory Overview

Requirement	Responsible Party	Main Timeline	Exporter Action	Main Risk
Confirm covered EU CN code	Importer and exporter	Before import	Complete code screening	Wrong applicability decision
Confirm authorised declarant	EU importer	Before covered import	Coordinate with buyer	Import process may be affected
Calculate embedded emissions	Exporter and installation operator	During reporting period	Maintain monthly data	Unsupported annual figures
Verify actual emissions	Accredited verifier	Before declaration	Prepare evidence file	Actual values may be rejected
Submit annual CBAM declaration	EU declarant	30 September following reporting year	Provide data early	Late buyer filing
Surrender CBAM certificates	EU declarant	30 September following reporting year	Provide accurate emissions	Additional certificate exposure
Apply importer-level threshold	EU importer	Calendar-year basis	Do not assume shipment exemption	Incorrect threshold conclusion
Retain operator records	Indian installation	At least 6 years	Maintain controlled repository	Verification trail unavailable
Monitor future expansion	Exporter and importer	Ongoing	Screen downstream products	Future products may enter scope

Preparing for Future EU Compliance Rules

The present list of covered goods may not remain unchanged.

The European Commission has proposed extending CBAM to selected downstream steel and aluminium products.

The proposal also includes stronger controls against circumvention and changes connected with certain scrap and electricity calculations.

As of July 2026, this proposed expansion is still moving through the EU legislative process. It should not be presented as final law.

Indian exporters should separate their compliance work into 2 tracks.

The first track is current compliance.

This includes:

• Screening products against the present Annex I list
• Providing factory-level data
• Supporting 2026 import declarations
• Preparing for verification

The second track is future monitoring.

This includes:

• Reviewing proposed downstream CN codes
• Identifying products that may enter scope
• Mapping major steel and aluminium precursors
• Adding carbon-data clauses to supplier agreements
• Reviewing long-term EU contracts

A product that is outside CBAM today may still face a buyer data request because the customer is preparing for future scope expansion or internal supply-chain reporting.

Conclusion

Future EU compliance rules are changing how Indian exporters manage customs classification, factory data and customer documentation.

The definitive CBAM phase began on 1 January 2026. The first annual declaration covering 2026 imports is due on 30 September 2027.

Although the EU importer normally handles the formal declaration and certificate surrender, the Indian exporter may need to supply installation-level information, production quantities, fuel data, electricity data, precursor information and verified embedded emissions.

The correct starting point is EU CN-code screening.

The next step is factory-level data preparation.

Exporters should then establish a repeatable process covering monthly data collection, supplier declarations, calculations, internal review, verification and buyer submissions.

Early preparation can help reduce buyer escalations, prevent inconsistent reporting and protect long-term access to the European market.

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