The impact will be seen from the calendar year 2026 to 2034, the rating agency said in a report.
The European Union (EU) is introducing the CBAM from October 1 this year.
Icra said the EU is the second largest steel-consuming block globally. It recently signed the mechanism laying the framework for the imposition of taxes on embedded carbon imports from six sectors, which includes steel, aluminium, cement, hydrogen, electricity, and fertiliser.
"...CBAM compliance requirements could pull down the profits of Indian steel exports to the EU by USD 60-165/MT between CY 2026 and CY2034. CBAM to impact between 15-40 per cent of India's annual steel exports which are made to Europe. Failure to reduce the carbon footprint may result in lower profits in EU markets," it said.
According to ICRA, India exports up to 3-5 million tonnes of finished steel to Europe every year. India produced 122 MT finished steel in FY 2022-23.
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