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.
Even though the EU said the tariff move is WTO-compliant, Srivastava argued that it violates WTO rules, further tightening market access to Indian exports.
He suggested that India should take up the matter with the EU during the ongoing free trade agreement negotiation. “India must urgently clarify its position in the ongoing India-EU FTA talks, ensuring that CBAM and safeguard measures do not neutralise tariff concessions,” he said.
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.