In January 2026, the EU's Carbon Border Adjustment Mechanism (CBAM) completed its transition period and entered full enforcement. For the first time, its impact has been quantified in concrete figures.

India's unalloyed aluminum exports to the EU collapsed from 18,654 tonnes (cumulative) in January 2025 to 10,875 tonnes in January 2026. According to aluminum industry media AlCircle, that represents a 41.7% decline in a single year. This is the first concrete, quantitative evidence that CBAM enforcement has embedded carbon costs as real trade costs — fundamentally altering the competitive equation.

Why Aluminum Showed the First Scars

Aluminum is a highly carbon-intensive material, demanding substantial electricity throughout its manufacturing process. With a relatively low share of renewable energy in its industrial mix, India's manufacturing sector is particularly exposed to the carbon costs imposed by CBAM.

Impact of CBAM Enforcement on India's Aluminum Exports
01

Export Volume Collapse

Unalloyed aluminum exports to the EU: 18,654 tonnes (Jan 2025) → 10,875 tonnes (Jan 2026). A 41.7% decline in one year (AlCircle).

02

Early Warning (FY25)

Before full CBAM enforcement, India's steel and aluminum exports to the EU had already declined 24.4% in FY25 (GTRI research).

03

Cost Increase Estimates

CBAM-related additional costs may raise India's aluminum export costs by 7–50% (industry estimates).

04

Conditions for Restoring Competitiveness

Maintaining competitiveness in the EU market is estimated to require export price reductions of 15–22% (same source).

Industry estimates put the CBAM-related cost increase for India's aluminum exports at 7–50%, with export prices needing to fall 15–22% to remain competitive in the EU market. That price pressure translated directly into the export volume decline.

This collapse was not without warning signs before full CBAM enforcement. By FY25 (fiscal year 2024), India's steel and aluminum exports to the EU had already declined 24.4% (reported by AlCircle, citing Global Trade Research Initiative research). This indicates that EU-side buyers began shifting their procurement sources during the CBAM transitional reporting period itself.

India's Countermeasures

The Indian government is developing a domestic Carbon Credit Trading Scheme (CCTS), aiming to reduce the carbon intensity of aluminum production and recover CBAM-related competitiveness.

Implications for Management, Procurement, and Design

India's 41.7% drop in aluminum exports is a direct signal to companies handling CBAM-covered goods. Japanese steel, chemical, and aluminum manufacturers face the same structural challenge. Estimating EU export costs, evaluating alternative procurement sources, and assessing supplier carbon intensity — these have shifted from near-future concerns to immediate priorities. Organizations must now quantify CBAM's impact at the procurement and business planning stage.