The European Union's Carbon Border Adjustment Mechanism (CBAM) will begin its definitive phase in 2026, marking a critical shift in global trade dynamics that will significantly impact Indian industries, especially steel and aluminium. As the EU emphasizes the importance of carbon pricing, India faces the challenge of aligning its domestic compliance pathways with EU standards while retaining capital within its borders. The Paris Agreement's Article 6 presents an opportunity for India to integrate high-quality carbon credits into its Carbon Credit Trading Scheme (CCTS), potentially allowing firms to meet compliance obligations without losing capital to the EU. However, implementing this strategy poses design and operational challenges, including the risk of diluting market stringency and addressing discrepancies between India's and the EU's emission estimation methods. To successfully navigate these complexities, India will need to prioritize high-value carbon reduction technologies and ensure robust governance structures for credit management. Ultimately, the EU's support in developing a CBAM-aligned tier within India's CCTS could facilitate a smoother transition and enable India to leverage international carbon markets effectively.