MAINS Current Affairs includes BRICS Needs to Address CBAM Consequences & Make in India, Measured Against Wrong Decade

International Relation / Climate Change

1. BRICS Needs to Address CBAM Consequences

Context

• India’s 2026 BRICS chairship has renewed debate over unilateral climate-linked trade measures, especially the EU’s CBAM, and the need for common carbon-accounting standards.

About Climate Agenda & Global Trade

• Climate policy and international trade are increasingly inseparable.
• Environmental regulation can directly affect market access, competitiveness and global supply chains as countries impose carbon prices, deforestation rules, sustainability due diligence and product-level emissions standards.
• For BRICS economies pursuing rapid industrialisation while reducing emissions intensity, fragmented climate-trade rules pose a particular challenge.
• The principle of Common but Differentiated Responsibilities and Respective Capabilities (CBDR-RC) recognises differences in countries’ historical responsibility and developmental capacities.

BRICS Climate Agenda for Rules-Based Cooperation

• The BRICS Declaration (2026) reiterates familiar positions on the UNFCCC, Paris Agreement, CBDR-RC, climate finance, biodiversity, forests and opposition to unilateral climate measures.
• However, extensive repetition of earlier declarations risks diverting attention from operational deliverables.
• The Declaration recognises traditional knowledge, indigenous and local practices and community experience (people-centric and community-based adaptation), an important approach for countries such as India, Brazil and China, where traditional ecological knowledge remains significant.
• BRICS can build on this by moving from declarations to common methodologies, mutual recognition and technical cooperation.

Unilateral Climate Measures and Protectionism: EU & BRICS

• BRICS has objected to unilateral climate-related trade measures that may become discriminatory or protectionist.
• The Rio Declaration (2025) specifically highlighted concerns regarding deforestation regulation, due-diligence requirements, taxes and other unilateral measures.
• The EU’s Deforestation Regulation (EUDR) and sustainability due-diligence requirements illustrate the trend towards embedding environmental compliance deep into supply chains.
  • For exporters, this creates demands for traceability, documentation, verification and emissions data.
• The challenge is to distinguish legitimate climate action from measures that impose disproportionate costs on developing-country producers.

Why Does Carbon Accounting Matters?

• Carbon accounting is the missing link in the BRICS climate-trade agenda.
• The Rio Declaration (2025) had proposed mutually recognised methodologies and standards for assessing greenhouse-gas emissions and welcomed principles for fair, inclusive and transparent carbon accounting in product and facility footprints.
• It is crucial because different jurisdictions may calculate the embodied emissions of the same product differently.
• Such fragmentation can result in different carbon values for identical goods, creating uncertainty and compliance costs for exporters.
• A common BRICS framework could establish comparable rules for:
  • system boundaries and emissions scopes;
  • treatment of precursor or embedded emissions;
  • verification and certification;
  • missing or incomplete data; and
  • mutual recognition of methodologies.

Cap-and-Trade: One Size Does Not Fit All

• Conventional cap-and-trade systems, developed around scarcity of emissions allowances in advanced economies, cannot simply be transplanted into developing economies whose simultaneous challenge is to expand production and reduce emissions intensity.
• India’s Carbon Credit Trading Scheme (CCTS) illustrates an alternative, intensity-oriented approach.
• Recognition of qualifying domestic carbon-pricing mechanisms can potentially reduce duplication, but exporters still need to establish emissions data, system boundaries and independent verification.
• Therefore, climate cooperation should recognise equivalent outcomes rather than impose identical policy architectures.

CBAM and India’s Export Challenge

• The EU’s Carbon Border Adjustment Mechanism (CBAM) entered its definitive phase in January 2026.
• Initially covering sectors including iron and steel, aluminium, cement, fertilisers, electricity and hydrogen, it links import obligations to embedded emissions.
• For Indian exporters, the concern is not merely the carbon price but the compliance ecosystem surrounding it.
  • Smaller firms may face substantial costs in monitoring, reporting and third-party verification.
• The proposed expansion of CBAM product coverage could further increase exposure of Indian exports, particularly in steel and aluminium.
  • Thus, India needs both domestic carbon-market capacity and international negotiations on recognition of its methodologies.

Way Forward for BRICS

• BRICS should use COP31 and other multilateral forums to build a cooperative alternative to fragmented climate-trade regulation.
• Operationalise the BRICS carbon-accounting principles sector by sector.
• Establish mutual recognition of emissions data and verification systems.
• Develop equivalence frameworks between different carbon-pricing mechanisms.
• Create technical assistance for MSMEs and developing-country exporters.
• Ensure climate-trade measures remain consistent with Paris Agreement principles, CBDR-RC and WTO rules.
• Link adaptation cooperation with traditional knowledge and community-based practices.

Conclusion

• BRICS can either remain a platform for repeatedly articulating opposition to unilateral climate measures or become a rule-making coalition for the Global South.
• A credible, transparent and mutually recognised carbon-accounting framework would allow BRICS to reconcile climate ambition with development, competitiveness and a fairer global trading system.

Indian Economy

2. Make in India, Measured Against Wrong Decade

Context: In 2026, when the Make in India initiative reaches its 12th year, evaluations of its effects on manufacturing, exports and employment are once again fueling discussion regarding India’s industrial transformation.

About Make in India and Its 12 Years of Performance

• The Make in India initiative seeks to turn India into a global manufacturing centre by drawing in investment, encouraging innovation, improving the ease of doing business, and creating employment.
• Its objectives include:
  • Raising the proportion that manufacturing contributes to GDP.
  • Boosting exports and global competitiveness.
  • Setting up jobs and improving industrial skills.
  • Lowering our reliance on imports and boosting domestic production.
• Achievements of Make in India in Past 12 Years:
  • The level of manufacturing growth rose from 2.4% in 2014 to 3% in 2025.
  • The PLI schemes have drawn in about ₹2.4 lakh crore in investment.
  • In the 2025–26 period, the value of electronics exports was $47.96 billion.
  • The capacity for manufacturing solar modules rose from 2.3 GW in 2014 to about 192 GW.
  • The production of Penicillin G at home has been picked up again, which is lowering the need to import it from China.
• However, the contribution of manufacturing to GDP is still below the long-standing government aim of 25%, and domestic value addition together with employment generation are still uneven.

India’s Manufacturing Performance

• Rising Manufacturing Contribution: The contribution of manufacturing increased from 2022–23, when its share of Gross Value Added (GVA) at constant prices was7 per cent, to 16.1 per cent in 2025–26.
• Investment & Industrial Expansion: The amount of foreign direct investment going into manufacturing rose from 48% to 55%.
  • The PLI schemes have been aimed at key sectors such as electronics, pharmaceuticals, automobiles, solar modules and specialty steel.
• Formalisation of Employment: The number of workers recorded by the Annual Survey of Industries in registered factories in 2024–25 was about 2.10 crore, which is 14 lakh more than the previous year.
  • The total number of people employed in manufacturing has stayed fairly steady while it shows an increase in formal industrial employment.

Global Context: Why Comparisons Matter?

• Different Growth Conditions: Merchandise exports worldwide increased from $6.2 trillion in 2002 to $18.8 trillion in 2013, which is a tripling, and they rose by less than 40% over the period from 2014 to 2025, reaching $26.3 trillion.
• Global Disruptions: The COVID-19 pandemic, disagreements between nations over tariffs and problems with the supply chains caused a weakening of international trade.
• Chinese Competition: In terms of competition, China’s manufacturing value added amounted to about $4.8 trillion (that is roughly nine times that of India), thereby increasing the pressure from competition due to its large-scale production and the exports at lower prices.
• Comparative Performance: India’s manufacturing value added increased by 73% in dollar terms from 2014 to 2025, as opposed to an increase of 51% in the case of China and 36% on a global scale.

Structural Reforms Supporting Industrialisation

• Several reforms have strengthened the manufacturing ecosystem:
  • The Goods and Services Tax (GST) helped to create a more integrated domestic market.
  • The Insolvency and Bankruptcy Code (IBC) has improved the framework for dealing with businesses that are experiencing difficulties.
  • In 2019 the corporate tax rate was reduced in order to decrease the tax burden on companies.
  • The Jan Vishwas Act removed a large number of minor offences related to business.
  • Labour Codes aim to make labour rules simpler and help businesses grow.
  • The costs relating to logistics are estimated to have dropped from 13 to 14% to about 8% of GDP.
• Moreover, the PLI schemes show a move towards strategic industrial policy since the major economies are now providing subsidies for domestic manufacturing.

Persistent Challenges and Issues

• Low Domestic value Addition: The domestic value added is still about 18 to 23 per cent, which shows that the country continues to rely on imported components.
• Employment Deficit: The employment shortfall is that manufacturing which is capital-intensive has not produced the number of jobs needed.
• Weak Labour-intensive Exports: Investment in textile PLI measures has not met expectations, and China still holds a leading position in a number of labour-intensive export sectors.
• Uneven Industrial Development: The development of industry is uneven since manufacturing abilities and investments are still concentrated in certain sectors and areas.
• Trade & Cost Pressures: High input costs, import competition, changes in oil prices, and uncertain global demand make private investment less appealing.
• Implementation Gaps: Gaps in implementation include problems relating to land acquisition, regulatory complexity, a shortage of skilled workers, and limited research and development activities.

Way Forward

• Deepen Domestic Value Addition: Promote domestic value addition by strengthening component manufacturing, the semiconductor ecosystems, and industrial research and technology transfer.
• Promote Labour-intensive Sectors: Encourage the development of labour-intensive industries by focusing on textiles, footwear, leather, food processing, and furniture in order to create large numbers of jobs.
• Improve Business Environment: Improve the business environment by making it easier to acquire land, obtain permits, and meet regulatory requirements while at the same time ensuring that the policies are predictable.
• Enhance Trade Competitiveness: Improve trade competitiveness by reducing inverted duties and streamlining the tariffs applied to intermediate goods, components and capital equipment.
• Integrate With Global Value Chains: Join global value chains by using trade agreements to draw in investment, broaden exports and obtain vital inputs.
• Strengthen MSMEs: Strengthen MSMEs by improving access to affordable credit, modern technology, skilled labour, and export markets.
• Measure Outcomes: Measure the outcomes by keeping track of domestic value addition, productivity, formal employment, export diversification and innovation together with investment commitments.

Conclusion

• The 12-year period of the Make in India initiative has seen real advances in manufacturing capacity, investment, and strategic production, but the benefits have been uneven.
• The next stage should shift its focus from rewarding production to establishing manufacturing that is globally competitive, employment-intensive and technologically advanced.
• Whether India will be able to achieve its ambition of becoming a major manufacturing power will depend on sustained reforms, export integration and stronger domestic capabilities.

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