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

India has achieved a significant diplomatic and commercial victory in the final stages of the India-UK Comprehensive Economic and Trade Agreement (CETA). By securing exemptions for the vast majority of its steel shipments, India has successfully navigated one of the most contentious hurdles in the bilateral trade pact.

A Landmark Consensus on Steel Trade

The primary friction point in the India-UK trade negotiations had been Britain’s upcoming steel safeguard regime, which threatened to limit Indian market access. However, following high-level discussions between India’s Commerce and Industry Minister Piyush Goyal and UK Secretary of State Peter Kyle, a landmark consensus has been reached.

Under the new agreement, 85% of India's steel exports will remain outside the scope of Britain's restrictive measures. To achieve this, India has secured a strategic mix of protection mechanisms, including Country-Specific Quotas (CSQ), residual quotas, and access through the Authorised Use Scheme (AUS). This arrangement ensures that Indian exporters can maintain a steady flow of products to the UK market without facing prohibitive barriers.

Understanding the New British Safeguard Regime

The negotiations come at a critical time, as the UK prepares to implement a much stricter steel regime effective July 1, 2026. The revised British framework is significantly more aggressive than previous safeguard mechanisms. Key features include:

Despite these tightening limits, the recent breakthrough ensures that Indian interests are protected, minimizing market disruptions and maintaining a balanced trading environment.

The Looming Challenge of Carbon Taxes (CBAM)

While the steel quota hurdle has been cleared, a new challenge looms on the horizon: the UK's Import Carbon Pricing Mechanism. Scheduled to come into force in 2027, this framework mirrors the European Union's Carbon Border Adjustment Mechanism (CBAM).

לפי ה-Global Trade Research Initiative (GTRI), מס פחמן זה עלול להשפיע על יצוא הודי בשווי של כ-775 מיליון דולר ארה"ב, תוך התמקדות ספציפית במגזרים כמו ברזל, פלדה, אלומיניום, דשנים וצמנט. ברגע שההקצבות החינמיות במסגרת תוכנית הסחר בפליטות (ETS) של בריטניה יבוטלו בהדרגה, המס עשוי לנוע בין 14% ל-24% משווי היבוא. בהתחשב בכך שייצוא הברזל והפלדה של הודו לבריטניה עמד על 893.4 מיליון דולר ארה"ב בשנים 2025-26, הטיפול בעצימות הפחמן יהיה חיוני לתחרותיות לטווח ארוך.

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