NEW DELHI: In a boost for businesses, the UK has agreed to recognize India’s carbon credit trading scheme, which will enable exporters to avoid “double taxation”.Officials said that the UK treasury has agreed to govt’s argument and decided to exempt goods as the Indian system was found to be meeting the qualifying criteria under the carbon border adjustment mechanism.The decision will come as a gain for govt, which was trying to include carbon tax in the trade negotiations but the UK authorities did not agree to the proposal at that time. Besides, armed with the exemption, govt will make a fresh bid for a similar dispensation in the European Union where a trade deal has been finalized and is expected to be operationalized next year.While the indicative list is being released by the UK treasury in individual cases there may be issues that will need to be sorted out. Officials said that relief that can be claimed by an exporter will depend on the effective carbon price that the product faces and the entity will need to explain to authorities in the UK the extent of levy that has been paid.CBAM is a carbon pricing tool on imported goods designed to equalize carbon costs and prevent carbon leakage. While companies in the UK and EU face the tax, the mechanism is meant to ensure level-playing field. However, if a company bears a carbon pricing burden in the home market, it has to be factored in by authorities in the UK and EU, businesses have argued.
