India-UK FTA: Major Breakthrough as 85% of Steel Exports Escape British Curbs

In a significant victory for Indian exporters, the India-UK Free Trade Agreement (FTA) has successfully resolved a major deadlock regarding steel safeguards. This landmark consensus ensures that the vast majority of India's outbound steel shipments will remain shielded from upcoming restrictive measures in the United Kingdom.

Resolving the Steel Safeguard Deadlock

The negotiation surrounding the UK's proposed steel safeguard regime was previously one of the most contentious hurdles in implementing the Comprehensive Economic and Trade Agreement (CETA). However, following high-level discussions between India's Commerce and Industry Minister Piyush Goyal and UK Secretary of State Peter Kyle, a framework has been established to protect bilateral trade.

Under the new agreement, 85% of India's steel exports will remain outside the scope of the UK's restrictive measures. To achieve this, India has secured a strategic combination of protections, including Country-Specific Quotas (CSQ), residual quotas, and access under the Authorised Use Scheme (AUS). This arrangement is designed to minimize market disruptions and maintain a balanced trading environment for Indian manufacturers.

Understanding the New British Steel Regime

The resolution comes at a critical time, as the UK prepares to implement a revised safeguard regime effective from July 1, 2026. This new framework significantly tightens import limits compared to previous versions. Key features of the British regime include:

Despite these tightening curbs, the consensus reached via the CETA ensures that Indian exporters can still operate within stable parameters for the bulk of their shipments.

The Looming Challenge of Carbon Border Taxes

While the steel safeguard issue has seen a breakthrough, Indian industry faces another significant regulatory challenge: the UK’s Import Carbon Pricing Mechanism (the UK's version of the EU's CBAM). Scheduled to come into force in 2027, this mechanism aims to tax carbon-intensive imports.

According to the Global Trade Research Initiative (GTRI), Indian exports worth approximately USD 775 million could be impacted by this carbon tax. The sectors most at risk include iron, steel, aluminium, fertiliser, and cement. Once the free allowances under the Emissions Trading Scheme (ETS) are phased out, the tax could range between 14% and 24% of the total import value. With India's iron and steel exports to the UK valued at USD 893.4 million in 2025-26, the stakes for navigating these green trade barriers remain exceptionally high.

Key Takeaways