India protects over 80% of steel exports to EU as 1.9 MT country quota is secured; residual access could push total to 2.8 MT

India has secured a country-specific tariff-rate quota of 1.9 million tonnes annually for steel exports to the European Union and the government expects exporters to secure another 0.9 mt through residual quotas, taking the total to 2.8 mt, an official said on Thursday.

This would potentially ensure that over 80% of the country's steel exports to the bloc, which stood at 3.0 mt in the last fiscal, will remain under the free trade agreement (FTA) at a time when the EU has tightened restrictions on steel imports. The government is also in talks with the EU on issues related to carbon pricing under the Carbon Border Adjustment Mechanism (CBAM), the official said. Indian exporters started availing the quota from July 1, when the EU's Steel Overcapacity Regulation came into effect, the person said.

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The regulation, aimed at protecting the EU's steel industry against global overcapacity, limits free-of-duty imports at 18.3 mt a year, and imposes a 50% duty on imports beyond the available quota. The quotas cover a gamut of steel products, including stainless steel, pipes and tubes, non-alloy and alloy hot-rolled sheets and strips, cold-rolled sheets, and organic-coated.

For product categories where India does not have a country-specific quota, it will have access to residual quotas, including general residual quotas which are open to eligible trading partners and preferential quotas reserved for EU FTA partners. "We have safeguarded 80% of our exports to the EU," the official said. "However, duty-free access will not mean cost-free entry," the person added, noting that the CBAM will apply to Indian steel "both within and outside the quota. According to think tank GTRI, "When fully phased in, the carbon charge could average about 35%." The European Commission has submitted proposals to the EU Council concerning the signing and conclusion of the FTA. The government expects the European Parliament approval process to complete by March 2027 after which the agreement would move towards operationalisation, subject to completion of the remaining procedures.

CBAM Verification

India is working with the EU to build domestic capacity for CBAM verification, including recognition of at least 10 Indian verification agencies, with six applications already submitted, the official said. "We have asked for faster approvals," he said, adding that India wants exporters to have access to verification agencies domestically. The move is aimed at ensuring that Indian exporters have sufficient domestic verification capacity to provide the emissions documentation required under CBAM, rather than having to depend on a limited pool of overseas agencies. India is also working on its Carbon Credit Trading Scheme (CCTS) and discussing carbon pricing with the EU, the official said. "CBAM is levied on everyone. If our exporters are competitive, it won't make us uncompetitive," the official said. The government is also monitoring any expansion of CBAM to additional products. "If they add more goods in CBAM, we will see," the official said.