India to make carbon fibre, blunting EU’s tax challenge
The plan will help India use carbon fibre in place of metals, which is set to be taxed by EU
India is planning to manufacture carbon fibre for use in aerospace, civil engineering and defence as an alternative to metal, two officials said, a move that will also help the country get around a proposed European Union carbon tax on steel, alloy and metal products.
Currently, India does not produce any carbon fibre, relying entirely on imports from countries such as the US, France, Japan and Germany. The European Union’s proposed Carbon Border Adjustment Mechanism, a tax on embedded carbon imports, kicks in in 2026.
Carbon fibre is a critical material in technical textiles and is known for its high strength and lightweight properties, making it essential for various applications such as fighter planes’ noses, civilian airplanes, drone frames, car chassis and fireresistant building material.
“To reduce import dependence and cater to future needs, the Indian government is considering setting up carbon fibre manufacturing units,” one of the two officials said.
“This plan includes conducting research in premier technical institutes such as Indian Institute of Technology (IIT) to ensure that these manufacturing units meet international standards,” the official said.
Such a move will also help enhance India’s self-reliance and strengthen its position in high-tech industries. Carbon fibre will be required in high-speed trains, replacing metal. It will also be essential for applications in atomic energy and defence. Hindustan Aeronautics Ltd is the industry partner of the textiles ministry for this project. “With this, India will have its own technology and manufacturing units. The project will be completed in the next three years,” the second official said.
Carbon fibre is a controlled item and is not available in the open market. Countries supplying carbon fibre can refuse to provide it at any given time, despite an agreement being in place, potentially disrupting defence projects.
Carbon fibre also serves as a basic raw material for numerous technical textiles products. The project is part of the National Technical Textiles Mission, started in 2020 to oversee various technical textiles activities.
India exports technical textiles worth $2.5 billion, with plans to increase this to $10 billion in the next five years. The country’s market share in the global textiles and apparel trade was 4% in the 2021-22 financial year.
Queries emailed to the textiles ministry did not elicit any response till press time.
According to the latest data from the commerce ministry, textile exports totalled $30.96 billion during the April 2023-February 2024 period, down from $32.33 billion a year ago.
India is the world’s third largest exporter of textiles and apparel with a 4.6% share of global trade, and ranks among the top five exporters in several textile categories. Exports are projected to reach $65 billion by FY26.
The government has identified five key focus areas to strengthen India’s textiles ecosystem. These include addressing skill gaps and infrastructure through initiatives such as PM MITRA parks, the production-linked incentive scheme, Technical Textiles Mission, Samarth and the National Handloom Development Programme. The textiles ministry is also hoping to attract ₹95,000 crore in investments that will create about 2.25 million jobs in the next four to six years. The ministry is eyeing ₹25,000 crore in investments through the production-linked incentive scheme and another ₹70,000 crore through the PM Mega Integrated Textile Regions and Apparel (PM-MITRA) parks scheme.
the European Union’s proposed CBAM will kick in
$2.5 bn technical textiles exports, which use carbon fibre