India-UK FTA: 85% of Indian Steel Exports Shielded from UK Safeguards

In a major diplomatic and economic breakthrough, India has successfully navigated the complexities of the UK's proposed steel safeguard measures within the India-UK Comprehensive Economic and Trade Agreement (CETA). This landmark consensus ensures that the vast majority of India's steel shipments will remain protected from restrictive British trade curbs.

Breaking the Deadlock on Steel Trade

The UK's steel safeguard regime was previously identified as one of the most significant hurdles in the implementation of the trade pact signed on July 24, 2025. However, following high-level discussions—including meetings between Commerce and Industry Minister Piyush Goyal and UK Secretary of State Peter Kyle—both nations have reached a consensus to promote bilateral steel trade.

The new arrangement ensures that 85% of India’s steel exports to the UK fall outside the scope of the restrictive measures. To protect Indian commercial interests, the agreement utilizes a strategic mix of Country-Specific Quotas (CSQ), residual quotas, and access under the Authorised Use Scheme (AUS). This framework is designed to minimize market disruptions and maintain a balanced trading environment for Indian exporters.

Understanding the New UK Safeguard Regime

The resolution comes at a critical time, as the UK is set to implement a much tighter steel regime starting July 1, 2026. Under these new rules, tariff-free steel imports will be capped, with overall quota volumes being slashed by 60% compared to the previous safeguard mechanism.

Any imports exceeding these established quotas will face a steep 50% tariff. These measures are specifically targeted at steel products that can be manufactured domestically within the United Kingdom. By securing these exemptions and quotas, India has effectively insulated its exporters from the most aggressive aspects of Britain's protectionist shift.

The Looming Challenge of Carbon Taxes

While the steel quota issue has been resolved, a new economic challenge is on the horizon: the UK’s Import Carbon Pricing Mechanism, similar to the European Union's Carbon Border Adjustment Mechanism (CBAM). Scheduled to come into force in 2027, this framework aims to tax carbon-intensive imports.

Les implications pour l'Inde sont considérables. Selon la Global Trade Research Initiative (GTRI), les exportations indiennes d'une valeur d'environ 775 millions USD pourraient être impactées par cette taxe carbone. La taxe, qui visera des secteurs tels que le fer, l'acier, l'aluminium, les engrais, le ciment et l'hydrogène, pourrait varier entre 14 % et 24 % de la valeur de l'importation une fois que les quotas gratuits dans le cadre du système d'échange de quotas d'émission (ETS) auront été supprimés progressivement. Étant donné que les exportations indiennes de fer, d'acier et de produits connexes vers le Royaume-Uni ont atteint 893,4 millions USD en 2025-26, la gestion de ces coûts carbone constituera la prochaine frontière majeure des relations commerciales entre l'Inde et le Royaume-Uni.

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