July 25, 2025

India's exports are increasingly vulnerable to climate-linked risks as revealed by a study conducted by Net Zero Tracker, a coalition of research groups at the University of Oxford. The study indicates that more than two-thirds of India's outbound shipments are exposed to tightening net-zero regulations in major markets. In the fiscal year 2024-25, India exported goods and services worth $824.9 billion, constituting around a fifth of the country's GDP. The UK and European Union are implementing stricter carbon policies, including carbon border adjustment mechanisms, which levy tariffs on greenhouse gas emissions linked to the production of specific imported goods. Net Zero Tracker emphasized the necessity for India to decarbonize its exports to address the increasing trade risk associated with high carbon emissions. The study highlighted that coal currently powers nearly three-fourths of India's electricity grid, leading to elevated emissions within various sectors, including IT and professional services. In comparison, competitor exporting nations are supplying the same markets up to 20 times more efficiently in carbon terms due to their cleaner energy systems. India is currently in talks for trade agreements with key partners such as the UK and the U.S. However, the looming implementation of carbon border adjustment mechanisms in Europe from 2026 poses a threat to India's market access by potentially imposing tariffs on carbon-intensive imports. India has committed to achieving net zero emissions by 2070 and recently introduced a draft sustainable finance taxonomy to direct investments into low-carbon sectors. Additionally, a new national emissions-reduction target is anticipated before the COP30 climate summit in Brazil in November.

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Tags: India, Exports, Climate-linked risks, Net-zero regulations, Carbon emissions, Trade deals, Carbon border adjustment mechanisms, Clean energy, Sustainable finance, Cop30 climate summit,