Indian exporters have urged the government to seek concessions from the European Union during the ongoing Free Trade Agreement (FTA) negotiations, following the bloc’s proposal to double steel duties to 50 percent while also reducing the tariff-free import quota, sources said.
Industry players argue that dual trade restrictions in the form of steeper duties and tighter quotas may severely impact exports of engineering goods with nearly 50 percent of those in the steel segment affected.
The European Commission on October 7 announced the proposal to limit tariff-free import volumes of steel to 18.3 million tonnes a year, reducing it by 47 percent compared to the quota set in 2024, while also doubling the out-of-quota duty to 50 percent.
This proposal will replace the steel safeguard measure set to expire by June 2026.
“The lower quota and higher tariff by the EU on steel will have to be addressed in the talks for the FTA. One cannot have a higher tariff rate and a safeguard duty. Exporters are pushing the government to do the same because it will majorly impact the steel segment of engineering goods exports. So, this has to be worked out during FTA talks with EU,” a source in the know of the matter said.
India exported engineering goods worth $27.5 billion to Europe in 2024-25 making them the top category of exports to the region.
“Exporters have reached out to the government already asking them for a solution on this. They have raised tariff from 25 to 50 percent - this will be a major blow,” the source added.
The EU’s decision to introduce more controls comes at a time when India is already seeking relaxations in the carbon tax proposed to be imposed by the bloc on imports of steel, aluminium, cement and fertilisers from January, 2026.
India and the bloc are presently engaged in the 14th round of negotiations for the trade agreement in Brussels, taking place from October 6 till October 10.
The 13th round of talks in September saw little progress due to lack of convergence in such sensitive sectors such as automotives and agricultural products.
In February 2025, India and the EU decided to ramp up talks for the proposed free trade agreement, targeting to close it by the end of 2025 to tide over ongoing disruptions from volatile trade policies.
The EU is India's largest trading partner, accounting for 12.2 percent of its trade, ahead of the US (10.8 percent) and China (10.5 percent). The bloc is the second-largest destination for Indian exports after the United States.
India is the EU’s ninth-largest trading partner, accounting for 2.2 percent of its trade in goods in 2023, well behind the US, China and the UK.
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