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

The long-standing deadlock regarding steel trade under the India-UK Free Trade Agreement has finally been resolved, marking a significant diplomatic victory for Indian exporters. Through a strategic consensus, India has ensured that the vast majority of its steel shipments will remain protected from the UK's upcoming restrictive safeguard measures.

A Strategic Win for Indian Steel Exporters

The implementation of the Comprehensive Economic and Trade Agreement (CETA) is set to begin on July 15, following a breakthrough in negotiations regarding the UK’s steel safeguard regime. This issue had previously emerged as one of the most significant hurdles in finalizing the trade pact signed on July 24, 2025.

According to an official statement, India has successfully negotiated a framework that shields 85% of its steel exports from Britain's new curbs. To achieve this, India secured a sophisticated combination of protections, including Country-Specific Quotas (CSQ), residual quotas, and access under the Authorised Use Scheme (AUS). This arrangement ensures that Indian manufacturers can maintain market presence despite the tightening regulatory environment in the United Kingdom.

Understanding the UK’s New Steel Safeguard Regime

The new British regime, scheduled to take effect on July 1, 2026, represents a significant tightening of trade limits. Under these rules, tariff-free steel imports will be subject to strict caps, with overall quota volumes being slashed by 60% compared to the existing safeguard mechanism.

Any imports that exceed these established quotas will face a heavy 50% tariff. The measures are specifically designed to protect steel products that can be manufactured domestically within the UK. For India, which recorded iron and steel exports to the UK worth USD 893.4 million in the 2025-26 period, this protection is vital to preventing massive market disruptions and safeguarding commercial interests.

The Looming Challenge of Carbon Border Taxes

Bien que la question des quotas d'acier ait été résolue, un nouveau défi économique se profile à l'horizon : le mécanisme britannique de tarification du carbone à l'importation (l'équivalent britannique du MACF de l'UE). Prévue pour entrer en vigueur en 2027, cette taxe carbone cible les secteurs à forte intensité de carbone, notamment le fer, l'acier, l'aluminium, les engrais, le ciment et l'hydrogène.

Le groupe de réflexion économique GTRI estime qu'environ 775 millions USD d'exportations indiennes pourraient être affectés par ce mécanisme. Une fois que les quotas gratuits dans le cadre du système d'échange de quotas d'émission (SEQE) du Royaume-Uni auront été totalement supprimés, la taxe carbone pourrait varier entre 14 % et 24 % de la valeur totale des importations. Cela reste un domaine de négociation crucial pour les décideurs politiques indiens qui cherchent à minimiser l'impact sur les industries lourdes.

Points clés