India’s export-oriented industries, particularly aluminium, iron and steel are becoming increasingly vulnerable to international regulatory pressures due to slow climate action, according to an assessment by Boston Consulting Group (BCG). The consulting firm warned that extreme weather events and tightening global carbon rules are placing pressure on profits, supply chains and long-term competitiveness.
BCG noted that India ranks among the top ten countries most affected by extreme weather, citing the newly released ‘Climate Risk Index 2026’. Sumit Gupta, BCG’s Asia-Pacific climate leader, said in an emailed interaction that the economic cost of climate inaction is growing rapidly. Drawing on RBI and World Economic Forum data, he indicated that about 4.5 per cent of India’s GDP could be at risk by 2030 due to climate-linked disruptions, while by 2100 climate challenges could cost between 6.4 per cent and over 10 per cent of national income.
Gupta added that businesses are already facing major impacts from damage to physical infrastructure and loss of productivity to project delays and declining investment efficiency in high-risk regions.
BCG India’s climate lead, Anirban Mukherjee, said the financial hit is becoming more severe for export-driven, hard-to-abate sectors. The European Union’s Carbon Border Adjustment Mechanism (CBAM) is expected to affect around USD 7.7 billion worth of Indian exports to the EU, roughly 10–11 per cent of total shipments to the bloc.
He further noted that climate inaction is exposing firms to rising risks that threaten profitability and stability. BCG estimated that direct climate risks alone could put 5–25 per cent of global 2050 EBITDA at risk.
Despite these challenges, the firm highlighted a shift in corporate attitudes. One-third of large Indian companies now rank climate strategy among their top three priorities, based on an assessment of 187 India-headquartered firms representing 85 per cent of market capitalisation. However, only around 40 per cent conduct physical climate-risk assessments, indicating that many are still underprepared.
Mukherjee also underlined the vulnerability of supply chains. MSMEs, which provide 60–70 per cent of components and services in sectors such as automotive, consumer goods, textiles, manufacturing and construction, are highly exposed to climate shocks. In the automotive sector alone, about 70 per cent of parts come from tier-2 and tier-3 MSME suppliers, making climate disruptions a significant threat to production.
As MSMEs account for roughly 45 per cent of India’s total exports, BCG estimated that 20–30 per cent of MSME exports could eventually face direct or indirect compliance burdens or added costs linked to CBAM and similar international carbon regulations.
With climate risks accelerating and global policies tightening, BCG’s analysis underscores the urgency for Indian companies to strengthen resilience, decarbonise operations and secure supply chains to maintain competitiveness in a rapidly evolving global market.
