Akshay Tandon, CTO & Co-Founder, Fitsol
When I raise CBAM with auto component makers, most of them tell me it isn't their problem because they don't export steel or aluminium. Today that is correct. From 2028, it may not be.
On 17 December 2025, the European Commission proposed extending CBAM to about 180 downstream products that are, on average, 79% steel or aluminium by content. The list includes chassis, gearboxes, road wheels, suspension systems, radiators and certain diesel engines. The Council adopted its position in June with about 200 products. The European Parliament adopted its position in September with 457. The first trilogue on 20 October ended without a deal, and the next round is reported for 30 November.
The three institutions disagree on how many products to cover. They do not disagree on when: all three would apply the extension from 1 January 2028. Nothing is law yet, and the final list will change. But a list that started at 180 and has been pushed towards 457 is not going to shrink to zero.
The exposure is real. ACMA reports that Indian auto component exports reached $24 billion in FY26. Europe was the fastest-growing region at $7.36 billion, up 9%, and Germany alone took 9% of exports. Engine components and drive transmission and steering systems made up more than half of everything exported. Those are the categories closest to the proposed list. The India–EU FTA concluded in January does not change this. The Commission has confirmed it grants India no exemption from CBAM.
The cost reaches you through your customer. The Indian supplier does not pay CBAM. The EU importer does, and it has to declare the emissions embedded in what it brings in. Where it has no verified data from the supplier, it uses the Commission's default values for that product and that country. Those defaults carry a mark-up of 10% in 2026, 20% in 2027 and 30% from 2028.
India's defaults are high to begin with. The base default for Indian hot-rolled flat steel is 4.28 tCO₂e per tonne, which becomes about 5.56 once the 2028 mark-up applies. Kallanish estimated that Indian hot-rolled coil imported on default values in Q1 2026 attracted a CBAM cost of about €254 per tonne. The Q3 2026 certificate price was €82.32 per tonne of CO₂, the highest this year. Faced with numbers like these, an importer will prefer the supplier who can hand over verified data.
The data you have is not the data that counts. Under the Commission's proposal, a downstream product's CBAM emissions are only those of its steel and aluminium inputs. Machining, pressing, welding and assembly are not counted. Many Tier-2 suppliers measure their own electricity and fuel use well. For CBAM, that number does not matter.
What matters is the emissions of a specific grade of steel from a specific plant. That data belongs to the mill or foundry one or two tiers up, and very few component makers have ever asked for it. Actual values also have to be checked by an accredited verifier. So the mill needs more than a number. It needs a number that survives an audit.
Two things are still open. First, the institutions differ on scrap. Parliament wants all aluminium scrap, including post-consumer scrap, counted as a precursor, with a single default for unwrought aluminium whatever its scrap content. That matters for die-casters running on secondary aluminium. Second, the European auto industry has argued that complex parts with hundreds of sub-components are hard to cover and has asked for a delay.
What I would start now. EU buyers will choose suppliers on data well before January 2028, and this data takes months to gather and longer to verify. Start with your highest-value EU-bound parts:
1. Map them against the CN codes in all three proposed lists, not just the Commission's. Some entries cover only part of a heading, so check at eight digits.
2. Build the steel and aluminium content of each part from your bill of materials, by grade, weight and source mill.
3. Ask your mills and foundries for installation-specific, verifiable emissions data rather than industry averages, and record which of them can provide it.
4. Ask your EU customers what they will need from you, in what format and by when. Their CBAM teams are already running this process for steel and aluminium.
None of this depends on how the final list turns out, and it is the same data OEMs are starting to ask for in their Scope 3 reporting. A supplier who starts in 2027 will be explaining gaps to a buyer who already has a competitor's numbers.
By 2028, the question for an Indian component maker will not be whether it exports steel. It will be whether it can prove how much steel is in what it exports, where that steel came from and what it emitted.
