A carbon tax is dangerous enough to cripple the entire country's economy

- Antenna - Vivek Mehta

- A seemingly straightforward carbon tax could destroy an entire country's economy and deindustrialization

The Carbon Border Adjustment Mechanism will break the bandwagon of industries in the world's smaller countries, including India. In December 2022, European Union countries finalized restrictions on carbon emissions controls. Its implementation will start from October 1, 2023. These restrictions are being tightened as industries move to areas with less stringent environmental protection restrictions. From October 1, every industry will have to provide their carbon emission data. In this way, carbon emission data of industries around the world will be collected. Its strict implementation will be started from 2026.

The largest trade with India in the world is with European Union countries. In the year 2021, India did 88 billion dollars of trade with these countries. 10.8% of India's total world trade is with European countries. So the carbon tax is expected to have a huge impact on India's exports. Implementation of carbon tax is likely to result in a gap of 100 to 170 billion dollars in India's exports. Which is around 30 percent of India's current total exports. Exports of products made from metals such as iron, steel and aluminum will face a major risk. Moreover, the carbon border adjustment mechanism will increase the compliance costs of companies. This expenditure has to be incurred only for the regulation, calculation, verification and reporting of carbon emissions. That is why Indian industries have demanded that this work be handed over not only to foreign agencies but also to Indian agencies. This effect will become more severe with the passage of years. The Carbon Border Adjustment Mechanism is intended to compel developing countries to meet their commitments under the Paris Agreement to protect the environment before the target deadline. Countries that cannot do so will not be able to export their products to European countries.

That is why Brazil, South Africa, India and China, i.e. the countries known as the basic group, have strongly opposed the carbon tax, saying that this step of the European countries is punitive and increasing pressure. This violates the terms of the Paris Agreement. Carbon taxes are also discriminatory between products originating in one country and those originating in another, in terms of WTO agreements. Indian industrialists also argue that industrialization in India started when the industries of western countries were reaching the peak of development. So it is equally important to consider when the industries in a country started emitting carbon while deciding the formula for calculating the carbon tax.

After implementation of carbon tax, the first impact will be export reduction. Then come in the form of closure of industries. With it comes the creation of unemployment. It affects the country's GDP. If the GDP falls, the economy of the country will be destroyed. Thus a seemingly straightforward carbon tax can destroy an entire country's economy and deindustrialization. That is why every industry should be wary of it.

Countries like America and Australia have planned to avoid it. The Government of India has also announced the launch of the Green Credit Program. A step has been taken under the Energy Conservation Act.