India faces emission roadblocks with rising net-zero demands

By Admin

25 Jul, 2025

As the global economy pivots towards sustainability, India is confronting growing challenges in aligning its export-led growth with climate ambitions. In 2024-25, India exported goods and services worth a staggering $824.9 billion, nearly one-fifth of the country’s GDP, according to data from the Reserve Bank of India. However, a significant portion of these outbound shipments over two-thirds are increasingly vulnerable to climate-linked trade regulations, according to a study by Net Zero Tracker, a coalition of research groups at the University of Oxford.

Climate Rules and Trade Tensions

Major economies like the UK and the European Union are leading the charge with carbon border adjustment mechanisms (CBAMs) tariffs aimed at imported goods with high greenhouse gas emissions. These mechanisms are scheduled to roll out in Europe by 2026, posing a new kind of tariff risk to countries with carbon-intensive exports. For India, whose export-driven economy is closely tied to these markets, the implications are serious.

Decarbonisation Pressure Mounts

Net Zero Tracker warns that high carbon emissions are fast becoming a trade risk. India’s export sectors, including flagship IT and professional services, are feeling the heat to decarbonise rapidly. One of the main hurdles is India’s energy mix coal powers nearly three-fourths of the national electricity grid, inflating the carbon footprint across various industries. In contrast, competing countries are already exporting to the same markets with up to 20 times greater carbon efficiency, thanks to their cleaner energy systems.

Striking a Balance: Growth vs. Green

The challenge for India is not just to sustain its export competitiveness but to do so while drastically cutting down emissions across sectors. This dilemma becomes even more pressing as India engages in trade negotiations with key partners like the UK and the US. Without proactive climate strategies, India risks losing ground in these markets due to environmental non-compliance.

Steps Towards a Greener Economy

India has made bold commitments on the international stage, pledging to achieve net-zero emissions by 2070. In a move to mobilize climate finance, the government also unveiled a draft sustainable finance taxonomy in early 2025, aimed at channeling investments into low-carbon sectors. Furthermore, a new national emissions-reduction target is expected to be announced ahead of COP30 in Brazil this November.

Conclusion

India’s export ambitions now stand at a crossroads, with rising global net-zero demands challenging traditional pathways of economic growth. As trade increasingly intertwines with climate policy, India must embrace a cleaner, more sustainable future not just to protect its market share, but to become a competitive, climate-resilient economy in the decades to come.