India secures duty-free quota access for 2.8 mt of steel exports to EU
India has secured a country-specific tariff-rate quota (TRQ) of about 1.9 million tonnes (MT) annually for steel exports to the European Union, with officials expecting exporters to access a further 0.9 MT through the EU's residual/unused quota pool — taking total potential duty-free access to about 2.8 MT.
This quota, arising from the India-EU Free Trade Agreement (FTA), is being extended even though the agreement is not yet formally ratified — officials describe the steel benefits as "front-loaded," implemented ahead of the pact's entry into force.
The 2.8 MT access is expected to cover more than 80% of India's roughly 3 MT of annual steel exports to the 27-nation bloc.
The arrangement operates within the European Union's Steel Safeguard/Overcapacity Regulation framework, under which imports beyond the available duty-free quota attract a substantial additional tariff.
EU Steel Safeguard and Tariff-Rate Quotas
The European Union has maintained a steel safeguard mechanism — originally introduced in 2019 in response to global steel overcapacity, and periodically extended and tightened — that caps duty-free steel imports through country-specific and residual (shared, first-come-first-served) tariff-rate quotas (TRQs). Imports within the quota enter free of additional duty; imports beyond the quota attract a steep out-of-quota tariff. A revised EU Steel Overcapacity Regulation took effect from 1 July 2026, tightening the overall quota volume while raising the out-of-quota duty.
Key Details
- Under the tightened regime, total EU duty-free steel import quotas are set at about 18.3 million tonnes across all trading partners, with a 50% duty applicable beyond the quota.
- TRQs are allocated as country-specific quotas (based on historical trade shares) plus a residual quota pool that any exporting country can draw upon once national quotas are exhausted.
- The India-EU FTA negotiation carves out a dedicated country-specific allocation for India, which is more favourable and predictable than relying solely on the shared residual pool.
India's 1.9 MT dedicated quota under the FTA framework, supplemented by roughly 0.9 MT accessible from the residual pool, together constitute the reported 2.8 MT total — explaining why officials describe the FTA's steel benefits as being realised ahead of formal ratification.
The India-EU Free Trade Agreement — Status and Comparison
India-EU FTA negotiations, originally launched in 2007 and revived in 2022, concluded on 27 January 2026 — described by the EU as its largest trade agreement to date. The pact now proceeds through signature and ratification by the European Council, the European Parliament, and India's Union Council of Ministers, with provisional application expected later in 2026 ahead of full entry into force.
Key Details
- Negotiations concluded: 27 January 2026; the agreement is being readied for formal Council signature, with full entry into force expected after ratification by both sides.
- Comparable prior Indian trade pacts: the India-UAE Comprehensive Economic Partnership Agreement (CEPA), in force since May 2022, and the India-Australia Economic Cooperation and Trade Agreement (ECTA), in force since December 2022.
- Unlike a Comprehensive Economic Partnership Agreement (CEPA), which typically carries an expansive services/investment chapter, the India-EU pact is being negotiated as a comprehensive Free Trade Agreement (FTA) covering goods, services, and government procurement.
The steel quota is among the earliest tangible benefits being realised from the India-EU FTA even before the treaty is legally in force, illustrating how sector-specific gains can be front-loaded through parallel administrative/regulatory arrangements pending full ratification.
Carbon Border Adjustment Mechanism (CBAM) — A Parallel Pressure on Indian Steel
The EU's Carbon Border Adjustment Mechanism entered its definitive, financial-obligation phase from 1 January 2026, after a transitional reporting-only phase that ran from 2023 to 2025. It requires importers of steel, cement, aluminium, fertilisers, hydrogen and electricity into the EU to purchase certificates corresponding to the embedded carbon emissions of the imported goods, priced in line with the EU Emissions Trading System (ETS).
Key Details
- CBAM sectors currently covered: iron and steel, cement, aluminium, fertilisers, hydrogen, and electricity.
- India's average steel emissions intensity (around 2.5 tonnes of CO2 per tonne of steel) is markedly higher than the EU's benchmark (around 1.8 tonnes CO2 per tonne), increasing Indian exporters' CBAM exposure.
- Studies estimate CBAM could raise costs on carbon-intensive Indian steel exports by roughly 8-14%.
The duty-free tariff quota under the FTA lowers one trade barrier, but CBAM operates as a separate, parallel carbon-cost barrier on the same steel exports — Indian exporters gain a more favourable quota regime even as they must simultaneously manage rising carbon-compliance costs to retain EU market access.
- India's country-specific EU steel tariff-rate quota: about 1.9 million tonnes annually
- Additional access via the EU's residual quota pool: about 0.9 million tonnes
- Total potential duty-free steel access: about 2.8 million tonnes
- Share of India's EU steel exports covered: over 80%
- India's total steel exports to the EU (last financial year): about 3 million tonnes
- EU's total duty-free steel import quota, all countries (post-July 2026 regulation): about 18.3 million tonnes
- Out-of-quota EU steel tariff: 50%
- India-EU FTA negotiations concluded: 27 January 2026
- CBAM definitive (financial obligation) phase applicable from: 1 January 2026