India-EU FTA to shield steel exports, says Commerce Ministry
The India-EU Free Trade Agreement, TEPA, is expected to soften the impact of tariffs and carbon rules on Indian steel exports to Europe, Commerce Ministry officials said on Thursday. They said over 80% of current exports would stay protected. India shipped close to 3 million tonnes of steel to the EU in FY2025-26, with a 1.6 million tonne tariff rate quota effective July 1. Industry sources fear guaranteed access will shrink across 16 categories.
Source
Commerce & Industry — Piyush Goyal · read the original report ↗
Desk check · some claims need care
What the desk checked (5)
- Over 80% of India's current steel exports to the EU would remain protected under the FTA framework. — Attributed to unnamed Commerce Ministry officials in the source; no document cited.
- India exported close to 3 million tonnes of steel to the EU in FY2025-26 and a 1.6 million tonne tariff rate quota took effect from July 1. — Figures appear in the source, attributed to officials; not independently verifiable here.
- Indian companies will still be able to export more than 2.5 million tonnes to the EU after MFN and other categories. — Attributed to 'concerned officials'; calculation basis not detailed in source.
- EU gave India a written assurance that any CBAM relaxation granted to another country would be extended to India. — Attributed to Commerce Ministry officials; the written assurance itself is not quoted or shown.
- EU importers may face 50% tariff where quantities exceed quota under Annex 2-B, reducing guaranteed access in 16 affected categories. — Attributed to an anonymous industry body representative; a contested industry interpretation, not an official position.
Analysts’ view opinion
This is a partial shield, not blanket relief. With India shipping close to 3 million tonnes of steel to the EU in FY2025-26, the Commerce Ministry's arithmetic — a 1.6 million tonne FTA tariff quota plus MFN and other routes adding up to over 2.5 million tonnes — does cover the bulk of existing trade and, on the government's reading, keeps more than 80 per cent protected. But the industry's objection is economically serious too: if guaranteed country-specific access shrinks across 16 categories, a 50 per cent tariff on volumes beyond quota eventually shows up in prices and margins.
- The main economic gain here is certainty rather than cheapness — exporters can price contracts, book orders and plan output with fewer unknowns.
- A 50 per cent above-quota tariff is paid up front by the EU importer, but if Indian mills must discount to stay competitive, the cost migrates onto their margins.
- CBAM is a cost story, not just a tariff story: verification and certification are recurring compliance expenses, and six foreign agencies applying as verifiers should ease capacity bottlenecks and delays.
- The EU's written assurance that any CBAM relaxation given to another country would extend to India functions as competitive-parity insurance rather than an immediate cost cut.
- The uncertainty concentrated in the 16 categories — wire rods, pipes, tin mill, stainless, coated and rolled sheets — tends to bite smaller and niche exporters hardest, since they have the least room to switch markets.
What to watch — Watch whether the European Commission agrees to revise the affected quota volumes upward before the agreement is ratified and signed, and whether the new access rules apply retroactively.
The story does not quantify the net effect on export earnings, steel prices or jobs, the industry concern rests on anonymous sources, and the agreement is still awaiting ratification and signature.
Deep dive
Research brief · 8 facts · 4 dates · exam-readyThe brief
Context
India and the European Union have negotiated a Free Trade Agreement branded TEPA (Trade and Economic Partnership Agreement), which the European Commission has sent to the Council for approval. A central worry for Indian steelmakers is the combination of EU quota restrictions on steel imports and the EU's Carbon Border Adjustment Mechanism (CBAM), a carbon levy on imported goods. Commerce Ministry officials say TEPA will cushion this impact and keep over 80% of current Indian steel exports to the EU protected, while industry sources argue guaranteed country-specific access will actually shrink across 16 steel categories.
Key facts
- Commerce Ministry officials said on Thursday that more than 80 per cent of India's current steel exports to the EU would remain protected under the TEPA framework.
- India exported close to 3 million tonnes of steel to the EU in FY2025-26.
- A tariff rate quota of 1.6 million tonnes for Indian steel under the FTA came into effect from July 1.
- Officials say that after factoring in Most Favoured Nation (MFN) and other applicable categories, Indian firms will still have room to export more than 2.5 million tonnes to the EU.
- Six foreign institutions have applied to work as carbon verifiers for Indian exporters under CBAM, according to Commerce Ministry officials.
- The EU has given India a written assurance that any CBAM relaxation granted to another country would be extended to India as well.
- The EU Steel Regulation has been in force since July 1; once the FTA is operational, India's access will be governed by Article 2-B.1(2) of Annex 2-B, possibly retroactively.
- Industry sources say EU importers may face a 50 per cent tariff where import quantity exceeds the Annex 2-B quota, even if within the quota under Implementing Regulation 2026/1457.
Timeline
- FY2025-26India exports close to 3 million tonnes of steel to the European Union.
- July 1EU Steel Regulation comes into force and the 1.6 million tonne tariff rate quota under the FTA takes effect.
- July 15Commerce Minister Piyush Goyal meets Bernd Lange, Chairman of the European Parliament's Committee on International Trade, in Brussels.
- September 17, 2026Commerce Ministry officials say TEPA will soften the impact of EU tariffs and carbon rules, protecting over 80% of current steel exports.
Who has a stake
- Indian steel exporters — Guaranteed country-specific EU market access across 16 categories, including hot and cold rolled sheets, coated sheets, tin mill products, quarto plates, wire rods and pipes.
- Union Commerce Ministry — Must show that TEPA shields exporters from quota curbs and CBAM costs; claims over 2.5 million tonnes of export room remains.
- European Commission / European Union — Administers the Steel Regulation, tariff rate quotas and CBAM; has been asked by industry to revise India's quota shortfall upward before ratification.
- Indian industry bodies — Warn of trade uncertainty and competitive disadvantage if Annex 2-B quotas fall below entitlements under Implementing Regulation 2026/1457.
- Carbon verification agencies — Six foreign institutions have applied to certify Indian exporters' carbon data for EU compliance.
Why it matters
The EU is one of India's most important steel markets, and market access is now inseparable from carbon compliance, meaning a trade deal alone no longer guarantees smooth exports. If Annex 2-B quotas fall below existing entitlements, Indian exporters could face 50 per cent tariffs and lose ground to competitors even under a preferential agreement. The outcome will test whether FTAs can be designed to absorb green trade barriers like CBAM.
UPSC angle
Prelims pointers
- TEPA stands for Trade and Economic Partnership Agreement, the name given to the India-EU Free Trade Agreement.
- CBAM is the EU's Carbon Border Adjustment Mechanism, applying carbon-related rules to imports such as steel.
- India's steel tariff rate quota under the FTA is 1.6 million tonnes, effective July 1.
- India's steel exports to the EU in FY2025-26 were close to 3 million tonnes.
- Annex 2-B of the EU-India FTA sets tariff-rate quota access for Indian steel imports into the EU.
- Piyush Goyal is the Commerce Minister; Bernd Lange chairs the European Parliament's Committee on International Trade.
Mains framing
The India-EU FTA (TEPA) illustrates how modern trade agreements must negotiate not just tariffs but also climate-linked regulation. The Commerce Ministry's case rests on volume arithmetic: a 1.6 million tonne FTA tariff rate quota plus MFN and other categories leaves room for more than 2.5 million tonnes against roughly 3 million tonnes exported in FY2025-26, protecting over 80 per cent of current shipments, with six foreign carbon verifiers entering the market and a written EU assurance of parity on any future CBAM relaxation. Industry counters that the EU Steel Regulation in force since July 1, read with Article 2-B.1(2) of Annex 2-B, would cut guaranteed country-specific access below entitlements under Implementing Regulation 2026/1457 across 16 categories, exposing EU importers to 50 per cent tariffs and creating retroactive uncertainty. The implication is that headline protection percentages may mask category-level losses in products such as hot and cold rolled sheets, coated sheets and pipes. The way forward suggested in the source is to seek an upward revision of the quantified shortfall from the European Commission before ratification and signing, alongside building domestic carbon measurement and verification capacity so CBAM compliance does not become a de facto trade barrier.
Key terms
- TEPA
- Trade and Economic Partnership Agreement, the name of the India-EU Free Trade Agreement.
- CBAM
- EU Carbon Border Adjustment Mechanism, which imposes carbon-related requirements and costs on imports including steel.
- Tariff Rate Quota (TRQ)
- A fixed volume of imports allowed at preferential duty; India's steel TRQ under the FTA is 1.6 million tonnes from July 1.
- Most Favoured Nation (MFN)
- Standard non-discriminatory tariff treatment; officials count MFN access to reach the 2.5 million tonne export headroom.
- Annex 2-B / Article 2-B.1(2)
- FTA provisions setting tariff-rate quota access for Indian steel entering the EU once the agreement is operational.
- Implementing Regulation 2026/1457
- EU regulation under which India currently holds guaranteed country-specific steel access entitlements.
Practice questions
- Examine how climate-related trade measures such as the EU's Carbon Border Adjustment Mechanism complicate the negotiation of free trade agreements, with reference to India-EU TEPA.
- The Commerce Ministry says over 80 per cent of Indian steel exports to the EU will remain protected, while industry warns of reduced access in 16 categories. Critically evaluate both positions.
- Discuss the steps India could take, domestically and in negotiation, to ensure that carbon compliance requirements do not erode its steel export competitiveness in the EU market.
Grounded only in the source report — figures and dates are the source's, not inferred.