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What is the European Union’s Carbon Border Adjustment Mechanism (CBAM)? Discuss its potential impact on Indian exports and suggest measures that India can take to mitigate this impact.

Topic: Effects of liberalization on the economy.

4. What is the European Union’s Carbon Border Adjustment Mechanism (CBAM)? Discuss its potential impact on Indian exports and suggest measures that India can take to mitigate this impact. (250 words)

Difficulty level: Tough

Reference: The Hindu

Why the question:

The article discusses the European Union’s (EU) Carbon Border Adjustment Mechanism (CBAM) and its potential impact on India’s exports.

Key Demand of the question:

To write about CBAM, its potential impact on exports and measures needed to mitigate it.

Directive:

Discuss – This is an all-encompassing directive – you must debate on paper by going through the details of the issues concerned by examining each one of them. You must give reasons for both for and against arguments.

Structure of the answer:

Introduction: 

Begin the answer by defining CBAM and objective behind its imposition.

Body:

In the first part, write the about the potential impact of CBAM on India exports – affect carbon-intensive sectors such as steel, cement, and aluminium. make goods more expensive in the EU market, potentially reducing demand and harming Indian producers, trade disputes between India and the EU etc.

Next, write about the steps India must take to mitigate its impact – reducing carbon emissions, engaging in dialogue with the EU, and exploring alternative markets.

Conclusion:

Conclude by writing a way forward.