NEW DELHI: As new synchronised steel trade measures by the UK and European Union (EU) came into effect on Wednesday, India preserved its competitive advantage in both markets. New Delhi’s free trade agreements with both trading partners have enabled it to make relative gains.
The EU and UK aim to combat “global over-capacity” by curbing the influx of “state-subsidised foreign steel” using these measures. Both expect that the steps could give rise to fair competition and utilisation of their domestic capacities.
The UK’s duty-free steel quotas for India have been pegged at the highest level among its trade partners barring the EU after recent negotiations that also cleared the path for implementation of Comprehensive Economic and trade Agreement (CETA) between the two countries. The EU’s measures reduce duty-free imports by 47% to 18.3 million tonnes, but set aside 50% of that quota for the countries it has entered into or is about to enter into a free trade agreements.
The new measures will supplant the steel safeguard mechanism that expired on June 30.
The UK’s measures that were first announced in March had said that duty-free steel imports would be brought down by 60%, but with the revisions carried out after talks, the cut is 51%. All imports over the quota limits will attract a 50% tariff, up from 25% in the safeguard mechanism that expired.
The final global quota by the UK has been set at 3.2 million tonnes per year, marking a 21% increase over the earlier provisional cap of 2.66 million tonnes. Due to the revision, India’s export quota for hot rolled coil, a key item, has been raised by 169% to 33,456 tonnes from 12,405 in the earlier (March) proposal. For metallic coated sheets the quotas remain unchanged at 1.25 lakh tonne. The total steel quota in the UK has been pegged at 1.67 lakh tonnes while India’s exports to that country stand at 1.37 lakh tonnes.
When the provisional quotas were announced, India had objected as it came after both countries had concluded their free trade agreement. This move by the UK also delayed the implementation of CETA. Both sides held a series of discussions involving trade ministers and officials before arriving at an understanding on June 17. After a meeting between UK Prime Minister Keir Starmer and Prime Minister Narendra Modi on the sidelines of the G-7 Summit it was decided to operationalise the CETA on July 15.
India and EU have already concluded negotiations on their FTA and expect to sign it by the end of this year. Of the total steel quota of 9.15 million tonnes for the EU’s FTA partners, India has cornered around 2 million tonnes across 16 products. This compares with 2.2 million tonne steel exported by India to EU in 2025-26.
India’s steel quota is the highest among all FTA partners of the EU. The economic bloc remains the biggest overseas market for Indian steel taking in 34.4% of the total exports of 6.6 million tonnes.
Under the mechanisms announced by the EU and UK, the FTA can also access the residual steel quota under certain conditions. Any exports above quota will attract 50% tariffs. In earlier safeguard measures out of quota exports attracted 25% duties.
Source: The Financial Express
