At the same time, experts said the removal of import duties on European steel will have little impact on India’s steel industry, as that remains costlier than domestically produced product due to the continent’s higher labour and power costs and stricter emission standards.
Europe is planning to levy a surcharge on imports in highly polluting industries like steel, aluminium, cement, and fertilizers under its Carbon Border Adjustment Mechanism (CBAM). Steel is the only sector within the CBAM’s purview with significant exports from India to Europe. While the scheme is in force from January, levies will begin only later in 2026.
The two trading partners will set up technical dialogue to explore preferential access for Indian manufacturers to the European market under the CBAM, Indian officials said during a press briefing on Tuesday.
Allowing computation of credits accrued under a future Indian carbon trading system is also being explored, they said, adding that an outcome should be expected in six to eight months.
Meanwhile, European negotiators have promised India automatic access to any preferential agreement struck with any other trading partner.
“The EU has come in with a new set of proposals on steel and we have agreed in good faith to work together towards a very preferential treatment as an FTA partner, so that India gets a better deal than most other countries with whom the EU does not have an FTA,” Piyush Goyal, India’s minister for commerce and trade, said during the press conference.
Advantage India
While steel exports are modest compared to domestic production, Europe remains the largest export destination. The trading bloc accounted for 40% of India’s steel exports of 8.6 million tonnes in 2025, showed data from commodities market intelligence firm BigMint.
The country produced 165 million tonnes of steel in 2025, according to data from the World Steel Association.
“The Indian industry exports 3 to 4 million tonnes of steel annually to the EU, while EU exports to India stand at around 0.3 to 0.4 million tonnes. As the quota review takes place, New Delhi can reasonably expect a higher allocation,” said Naveen Jindal, the chair of Jindal Steel Ltd and the president of the Indian Steel Association.
Hemant Dewangan, assistant general manager for Steel Operations at BigMint, said while there was a lack of clarity on what kind of concessions India will get under the CBAM, Europe is already a favoured destination for Indian steel exports, and if Indian mills get any concessions like higher quotas or lower duties under the framework, it will help in expanding the trade.
No import concerns
India has also offered to remove the 22.5% duty on steel imports from Europe. However, Europe exports only trace quantities of speciality steel to India—less than 1% of the country’s annual steel consumption of about 160 million tonnes—which experts said will not pose a competitive threat to domestic manufacturers.
“Steel made in Europe sells at a high premium to that in India, so even if there is no import duty, it will be difficult for European mills to find buyers in India for normal grades of hot-rolled coil and cold-rolled coils,” Dewangan said.
What the duty reduction might lead to is a rise in the procurement of speciality steel from certain EU countries that New Delhi currently imports from Japan, South Korea, and China, according to Suman Kumar, assistant vice-president for metals and mining at brokerage Philip Capital.
A real concern for Indian steelmakers isn’t the import of steel from Europe, but the import of cars, said Niladri N. Bhattacharjee, partner and metals and mining industry leader, professional services firm Grant Thornton Bharat. India’s domestic market for automotive-grade steel is over 15 million tonnes a year, he added.
“As India cuts import duty on vehicular imports from the EU, a small but growing part of this steel production, which goes into the higher-end car market, might get substituted by direct luxury car import from EU nations. The quantum and the period over which this impact will remain need to be seen,” he said.