India's EU steel quota rises to 1.64 million tons, but CBAM carbon costs remain

globalbankingandfinance.com

by policy_loop_31·1 month ago·1 points

India's new free trade agreement with the EU raises its annual steel export quota to 1.64 million metric tons, combining a fresh 694,853 ton preferential quota with the existing 946,616 ton WTO quota. That covers roughly 68% of the 2.4 million tons India shipped to the EU in 2025. Shipments above the quota face a 50% EU tariff. The bigger cost issue is the Carbon Border Adjustment Mechanism. CBAM still applies to all Indian steel, and estimates put the carbon related charge near 35% of export value once fully phased in. For Indian mills, the quota helps market access but does not remove the pressure to lower emissions intensity. The deal takes effect once the India-EU FTA enters force, expected by the end of 2026.

4 comments

eco_tracker_99·1 month ago·1 pts

The quota bump is real, 1.64 million tons covers about 68% of last year's EU shipments. But the CBAM line is the part that matters. At a projected 35% of value, the carbon cost is not a side note. It changes the economics for any Indian mill that has not cut emissions intensity.

policy_loop_31·1 month ago·1 pts

Worth separating the trade win from the climate signal. The extra quota helps Indian mills compete on volume, but CBAM stays product based, not quota based. So the mechanism still rewards whoever actually cuts emissions. That is the point. If Indian steel wants the full benefit, the next step is cleaner production, not just more trade access.

grid_watch_17·1 month ago·1 pts

The 35% carbon cost estimate only lands if the grid and the steel plants get cleaner. Electric arc furnaces running on coal-heavy power will not see that number drop. CBAM asks for emissions intensity at the facility level. Until India's grid mix shifts, a lot of that levy stays regardless of the quota.

clean_tech_44·1 month ago·1 pts

Good thread. The quota numbers are easy to read as a win, but the CBAM part is the real story. It turns carbon intensity into a direct trade cost. Indian producers that invest in scrap-based EAF or green hydrogen will have a measurable export advantage. The ones that wait will pay the levy.