EU Slashes Steel Import Quota by 47% and Doubles Tariffs on Indian Exports from 2026 Under CBAM

New EU steel tariffs and CBAM rules threaten India’s $3.7 million tonne export market, risking competitiveness and sparking calls for urgent India-EU trade talks

EU Tariff & Quota Changes on Indian Steel

Key Measures:

· Tariff-free quota for steel imports from India to the EU will be cut by 47% starting June 2026.

· Out-of-quota tariffs will be doubled by 50%.

· These changes will replace the current steel safeguard mechanism.

Impact on India:

· India exported 3.71 million tonnes of steel to the EU in 2024 (45% of its total steel exports).

· Exports to the EU dropped 31.4% in Jan–Aug 2025 vs. same period in 2024.

· CBAM (Carbon Border Adjustment Mechanism), effective January 1, 2026, is already straining compliance and competitiveness.

Strategic & Economic Context

CBAM Objectives:

· Targets imports from countries with less stringent carbon rules.

· Applies to steel, cement, electricity, aluminium, and fertilisers.

· Aims to level the playing field for EU manufacturers.

EU Rationale:

· EU steel sector has lost 65 million tonnes of capacity since 2007.

· Capacity utilization fell to 67% in 2024; job losses range from 9,000 to 100,000.

· EU claims WTO compliance, citing global overcapacity (5× EU consumption).

Indian Response & Trade Strategy

Concerns Raised:

· Experts argue the move may violate WTO rules.

· India urged to address the issue in ongoing India-EU FTA talks.

· Risk: CBAM and safeguard measures could nullify tariff concessions.

Domestic Safeguard Proposal:

· India has proposed a 12% safeguard duty on steel imports for 3 years.

· Industry demands 25%, citing global precedents (U.S. at 50%, EU at 25%).

Implications

· Indian steelmakers may pivot further to the domestic market but want export flexibility.

· The EU’s move could reshape global steel trade flows and trigger retaliatory measures.

· Urgent need for India-EU negotiations to protect market access and ensure fair treatment under CBAM.

[ABS News Service/16.10.2025]

Steel exports to the European Union, a market that accounted for 45 per cent of Indian exports in 2024, will come under enormous strain with the European Commission’s proposal to slash tariff-free import quota by 47 per cent and to double the duty on out-of-quota imports by 50 per cent.

The proposal will replace the steel safeguard measure that is set to expire by June 2026, potentially harming the prospects of countries such as India, which exported 3.71 million tonnes of steel to the EU in 2024, compared with its total exports of 8.24 million tonnes.

Coupled with the Carbon Border Adjustment Mechanism (CBAM), which will take effect from January 1, the new tariff proposal would make the landed cost of Indian steel exports in the EU far less competitive than it is currently, experts and industry participants say.

According to data accessed from market intelligence firm BigMint, steel exports to the EU are down 31.4 per cent from January-August of 2025 compared with the same period of 2024. India had exported 2.86 mt of steel in the first eight months of last year, in contrast with 1.96 mt in 2025, showing strains of CBAM requirements.

“Already, India’s steel and aluminium exports to the EU fell 24 per cent in FY 2025 as CBAM reporting began and most firms struggled with compliance. Once the new safeguard regime replaces the current one in June 2026, the EU market will effectively be semi-closed,” Ajay Srivastava, founder of Delhi-based research group Global Trade Research Initiative, noted.

India’s steel exports to the EU primarily comprise flat-rolled products such as hot-rolled coils (HRC), cold-rolled coils, and metallic-coated products, along with other non-alloy and alloy variants.

While the tariff is seeking to address the steel overcapacity situation in the EU, the CBAM is aimed at a level playing field for steel, cement, electricity, aluminium and fertilisers industries against imports from geographies where carbon emission rules are more relaxed than the EU, and consequently, enjoy a cost advantage over European manufacturers.

Unveiling the tariff plan, European Commission President Ursula von der Leyen said: “A strong, decarbonised steel sector is vital for the European Union’s competitiveness, economic security and strategic autonomy. Global overcapacity is damaging our industry. We need to act now.”

WTO compliance

The EU steel industry is the only major region that has lost some 65 mt of capacity since 2007. In 2024, the capacity utilisation rate reached 67 per cent compared with healthy rates of around 80 per cent. And some 9,000-100,000 jobs have been lost since 2007. The sector registered record losses in 2024, the EC said last week. It argued that the EU is facing the brunt of global overcapacity in steel, which is five times of EU’s steel consumption.

For Indian steel producers, the focus in recent years has been the burgeoning domestic market. However, companies prefer to have the flexibility to tap overseas if an opportunity arises, as seen during the Covid years.

Safeguard duty

The EU tariff move also shone a spotlight on India’s proposal for a safeguard duty at 12 per cent on steel imports to the country for three years. Pointing to the global trend — 50 per cent tariff by the US and the existing 25 per cent tariff by the EU — the domestic industry demanded a 25 per cent safeguard duty.

“India’s safeguard duty appears inadequate given the global trend. The size of the wall does matter today,” an Indian steel producer observed.