Exporting into a world with carbon taxes; The place of short selling; Innovation by Indian startups
Exporting into a world with carbon taxes
Carbon emission imposes negative externalities, which motivates a carbon tax. If one country introduces a carbon tax, this hampers production within the country when compared with polluting locations elsewhere. Hence a carbon tax always goes with a carbon border tax which is charged upon the carbon-content of imported goods.
All this used to be considered futuristic. The first carbon tax is the European Union’s `Carbon Border Adjustment Mechanism’ (“CBAM”). It will kick in, for a few industries, on 1 January 2026, and firms exporting into the EU in these industries have to start submitting facts about their carbon content from 1 October this year.
Some in India view this with consternation. Writing in the Business Standard yesterday, Akshay Jaitly and I offer ideas on how Indian policy makers should respond to this evolving landscape. We emphasise a sub-national perspective: carbon taxes in India’s export destinations matter more for the four big exporting states.
The place of short selling
In recent months, there has been a lot of hang wringing about short sellers. On 18 April, K. P. Krishnan, Renuka Sane, Anjali Sharma, Harsh Vardhan, Bhargavi Zaveri-Shah and I have an article on The Leap Blog titled The place of short selling in the financial markets, where we think about the infeasibility of short selling in India, the role for state coercion against short selling and against speech, and the extent to which managers of firms should expend resources to scotch rumours about the firm.
How innovative are startups in India?
Fast paced firm creation using external capital, through the new kind of entrepreneurship called “the startup”, has now been in motion for some time in India. On 25 April, Aneesha Chitgupi, Karthik Suresh and Diya Uday wrote an article on The Leap Blog, Are startups engaging in innovation in India? Measured by patents and by a formal process operated by the Income Tax department, their answer is broadly in the negative.