Key Takeaways:

• The goal of the India-EU FTA is to finalize negotiations before December 2025, and steel is one of the important areas of negotiation.
• As part of the negotiations, the EU has proposed a 47% cut on quotas and keep tariffs 50% above the limit under the regime of the CBAM, proposed for 2026.
•  In 2024, India exported 3.71 metric tonnes of steel to the EU, which represented 45% of total exports.
• Export volumes to the EU dropped by 31% in 2025 compared to 2024, largely due to the pressure from the proposed CBAM regime and the uncertainty of EU tariffs.
• It is critical for the success of the FTA to sustain India’s trade volume of US$136.5 billion with the EU.

After the conclusion of the 14th round of Free Trade Agreement (FTA) negotiations in Brussels, the steel industry remains a key debate and issue affecting bilateral trade between India and the European Union (EU). Both countries want to complete the pact by December 2025, which is likely to increase trade ultimately, but is likely to have challenges, mainly on steel imports and tariffs.

Current Status of the India-EU Trade Talks

The FTA negotiations between India and Europe have been re-initiated after a gap of eight years, with a very extensive agenda that consists of goods, services, investment, intellectual property, and sustainability. Steel has been a prominent area of discussion with both parties negotiating tariff and quota arrangements currently.

The European Commission has proposed a substantial cut of 47% in the duty-free steel import quota from India and doubling the tariffs on imports exceeding this quota to 50%. This line up with the EU's Carbon Border Adjustment Mechanism (CBAM), effective January 2026.

Steel Export Data and Market Impact

In 2024, India shipped approximately 3.71 million tonnes of steel products to EU markets, accounting for roughly 45% of total Indian steel exports. The EU makes up nearly half of India's alloy steel market, with significant steel exports to Italy, Belgium, and Spain.

However, the volume of steel exports is already beginning to experience pressure from the impending measures. Steel exports from India to the EU fell more than 31% between the first eight months of 2025 compared to the first eight months of 2024, as per various sources. These inventory removals indicate a growing challenge of compliance with CBAM measures and tariff uncertainty.

Industry Perspectives

Industry experts are underscoring the significant implications of recent changes to tariffs and quotas. The EU tariffs and quotas on steel pose an even bigger challenge than the comparable US tariffs, given India's substantial exposure of its steel exports to Europe. Experts have referred to the EU tariffs and the effects of the Carbon Border Adjustment Mechanism (CBAM) combined as a “double whammy," which could make Indian steel as much as 60% less competitive in the EU. Thus, the emphasis of Indian exporters should be to shift the trade focus outside of the EU and explore emerging opportunities in Asia, Africa, and Latin America in response to diminished levels of demand in EU markets.

Strategic Recommendations for Indian Steel Exporters

To confront these challenges, exporters should:

• Diversify their export destinations to reduce dependency on the EU.
• Accelerate the adoption of green steel production practices to comply with environmental standards like CBAM.
• Enhance logistics and supply chain efficiency to lower costs.
  

Conclusion

The India-EU FTA is more than just a trade agreement - it is a strategic platform that will shape the future of India's steel exports in the context of the changing global trade environment. The imposition of extra tariffs and cuts to import quotas may present short-term roadblocks for the sector. They do make the case for the necessity of innovation, diversification, and sustainability in Indian steelmaking.

With bilateral trade between India and the EU reaching a record $136.5 billion in 2024-25, the successful negotiation and implementation of the FTA will be crucial to maintaining and expanding India’s position in the global steel market.