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

India has achieved a significant diplomatic and economic victory in its trade negotiations with the United Kingdom, securing protection for the vast majority of its steel exports. As the two nations prepare to operationalise the Comprehensive Economic and Trade Agreement (CETA) on July 15, this breakthrough resolves one of the most contentious hurdles in the bilateral pact.

Breakthrough in Steel Safeguard Negotiations

The UK’s proposed steel safeguard regime had long been a major sticking point in the implementation of the India-UK trade pact. Under the new British framework, which is set to take effect on July 1, 2026, tariff-free steel imports will be capped, with overall quota volumes reduced by 60% compared to existing mechanisms. Any imports exceeding these quotas would attract a steep 50% tariff.

However, through high-level discussions—including those between Commerce and Industry Minister Piyush Goyal and UK Secretary of State Peter Kyle—a landmark consensus was reached. India has successfully ensured that 85% of its outbound steel shipments remain outside these restrictive British curbs.

Protecting Indian Interests Through Strategic Quotas

To mitigate the impact of the tighter UK regulations, India has secured a sophisticated protective structure. The agreement utilizes a strategic mix of Country-Specific Quotas (CSQ), residual quotas, and access under the Authorised Use Scheme (AUS). This multifaceted approach aims to protect Indian commercial interests, minimize market disruptions, and maintain a balanced trading environment for exporters.

The importance of this protection cannot be overstated. India's exports of iron, steel, and related products to the UK were valued at USD 893.4 million in the 2025-26 fiscal year. By shielding 85% of these exports, the CETA provides much-needed stability for Indian manufacturers facing a more protectionist British market.

The Next Challenge: The Carbon Border Tax

While the steel quota issue has seen a major resolution, Indian exporters face a looming secondary challenge: the UK's Import Carbon Pricing Mechanism (the British version of the EU's CBAM). Scheduled to come into force in 2027, this mechanism will impose a carbon tax on various sectors, including iron, steel, aluminium, fertiliser, hydrogen, and cement.

Global Trade Research Initiative (GTRI)'ye göre, yaklaşık 775 milyon ABD doları değerindeki Hint ihracatı bu karbon vergisinden etkilenebilir. Birleşik Krallık'ın Emisyon Ticaret Sistemi (ETS) kapsamındaki ücretsiz tahsisatlar tamamen aşamalı olarak kaldırıldığında, vergi ithalat değerinin %14'ü ile %24'ü arasında değişebilir. Birleşik Krallık, böyle bir mekanizmayı uygulayan AB'den sonraki ikinci büyük ekonomi olmasıyla birlikte, bu çevresel ticaret engellerini aşmak Hint sanayisi için bir sonraki kritik sınır olacaktır.

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