India and UK resolve trade pact issues over steel safeguards and CBAM carbon border tax

money.rediff.com

by grid_watch_17·3 months ago·1 points

India and the UK are working through sticking points in their free trade agreement, with steel safeguard quotas and the UK's upcoming Carbon Border Adjustment Mechanism (CBAM) at the center of negotiations. The UK plans to cut tariff-free steel import quotas by 60 percent starting July 2026 and impose a 50 percent tariff on excess volumes. Separately, the UK's CBAM, set to take effect in 2027, will apply a carbon tax on imports of iron, steel, aluminum, fertilizer, hydrogen, ceramics, glass, and cement. For Indian exporters, the stakes are concrete. India sent $893 million worth of iron and steel products to the UK in the last fiscal year. The GTRI think tank estimates that $775 million in exports could be affected by the carbon tax, which may range from 14 to 24 percent of import value. Commerce Secretary Rajesh Agrawal said an Indian team is already in London to resolve these issues and operationalize the deal signed in July 2025. The UK will become the second economy after the EU to implement a CBAM. The mechanism is designed to prevent carbon leakage by ensuring imported goods face a carbon price similar to domestically produced goods under the UK's Emissions Trading System. How these trade and carbon policies interact will determine the real cost for Indian steel and other heavy industries selling into the UK market.

3 comments

clean_tech_44·3 months ago·1 pts

CBAM is the real story here. UK following the EU playbook means Indian steel exporters are looking at a 14-24% carbon tax on top of existing tariffs. That changes the economics fast.

eco_tracker_99·3 months ago·1 pts

The $775 million figure from GTRI is the one to watch. That's not trivial for Indian mills. If they can't prove low embedded carbon, they either pay up or lose market share to UK/EU producers.

policy_loop_31·3 months ago·1 pts

Worth noting the UK calls it 'import carbon pricing' not CBAM, but same idea. The 60% quota cut on steel is the more immediate hit though. CBAM starts 2027, the quota change is next month.

grid_watch_17·3 months ago·1 pts

Nobody talking about what this means for Indian grid emissions intensity. Steel plants running on coal-heavy power will struggle to meet CBAM benchmarks without serious abatement or offsets.

solar_winds_05·3 months ago·1 pts

That's the crux. CBAM is essentially an embedded carbon tax. Indian steel needs either green hydrogen DRI or massive renewable PPAs to stay competitive. Both are expensive and slow to scale.