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<p>This paper examines how destination-country climate policies and environmental standards influence India’s export competitiveness in carbon-intensive sectors. Using a structural gravity framework estimated through the Poisson Pseudo-Maximum Likelihood with high-dimensional fixed effects (PPMLHDFE), it analyzes India’s export flows in six CBAM-targeted product groups—iron and steel, aluminium, cement, fertilizers, hydrogen-related chemicals, and electricity—to 30 major trading partners during 2002–2023. Results show a differentiated pattern: CBAM alignment in importing countries enhances exports in aluminium, cement, and fertilizers, but restricts trade in hydrogen and electricity. Higher greenhouse gas emissions in destination economies increase Indian export flows, whereas stronger environmental performance (EPI) significantly reduces them, underscoring market-driven decarbonization pressures. These findings reveal a two-speed green trade transition and highlight the urgency for sector-specific decarbonization, MRV upgrading, and carbon-efficiency investments to sustain India’s export growth under tightening climate-aligned trade regimes.</p>

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Destination-country CBAM scores, environmental performance, and India’s exports: a PPML gravity approach

  • 期刊论文

  • 发表日期：

    2026年3月16日

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  • Nisha Kumari,
  • Shrimoyee Ganguly

摘要

This paper examines how destination-country climate policies and environmental standards influence India’s export competitiveness in carbon-intensive sectors. Using a structural gravity framework estimated through the Poisson Pseudo-Maximum Likelihood with high-dimensional fixed effects (PPMLHDFE), it analyzes India’s export flows in six CBAM-targeted product groups—iron and steel, aluminium, cement, fertilizers, hydrogen-related chemicals, and electricity—to 30 major trading partners during 2002–2023. Results show a differentiated pattern: CBAM alignment in importing countries enhances exports in aluminium, cement, and fertilizers, but restricts trade in hydrogen and electricity. Higher greenhouse gas emissions in destination economies increase Indian export flows, whereas stronger environmental performance (EPI) significantly reduces them, underscoring market-driven decarbonization pressures. These findings reveal a two-speed green trade transition and highlight the urgency for sector-specific decarbonization, MRV upgrading, and carbon-efficiency investments to sustain India’s export growth under tightening climate-aligned trade regimes.