India seeks steel tariff relief from EU for auto duty cuts in FTA talks

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

India is likely pushing for lower tariffs and relaxed quotas on steel exports to the European Union (EU) in return for reducing import duties on automobiles, as part of negotiations for the proposed Free Trade Agreement (FTA) between the two sides, sources aware of the developed said.

“The automobile sector is a sensitive issue, but it has been linked to steel in the (FTA) discussions,” said a source.

“India’s position is that if the EU wants concessions on autos, it should offer something on steel. Their existing quota for steel imports is not based on 2024 trade flows, it is tied to the 2013 benchmark, which effectively halves the quota and doubles the duty,” the first source added.

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.

However, a second source cautioned that it may not be easy to directly link the two sectors, as the EU’s proposed steel safeguards are part of a broader effort to curb dumping and protect its domestic industry.

India too back in April imposed a 12 percent safeguard duty on some steel products to check rampant imports.

India exported iron, steel, aluminium, and related products worth $565.7 million to the EU in September 2025, up 26.5 percent year-on-year. Of this, iron and steel accounted for the largest share at $336.49 million.

Auto versus steel

India may have agreed to offer import duty concessions on high-end cars from the European Union, a key demand from the bloc in the ongoing FTA talks, Moneycontrol reported earlier.

Currently, the import duty levied by India on completely built-up (CBU) passenger vehicles is 110 percent for cars costing over $40,000, and 70 percent for cars costing up to $40,000.

The Commerce Ministry had not responded to requests for comment at the time of publishing this report.

Indian exporters have already urged the government to seek concessions from the European Union during the ongoing FTA negotiations, citing 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.

India exported engineering goods worth $27.5 billion to Europe in 2024-25 making them the top category of exports to the region.

“The EU should not take the 50 percent duty imposed by the US as the correct benchmark,” the first source added.

Most Indian exports to the United States, including steel and aluminium, currently attract a 50 percent duty. The two countries are in talks for a trade agreement aimed at reducing tariffs.

Overall shipments of engineering goods, India’s top export to the US, saw a moderation in growth to 2.9 percent on-year at $10.1 billion in September versus a rise of nearly 5 percent in August.

India-EU FTA

India and the European Union are also negotiating a trade deal, with discussions expected to conclude by the end of 2025.

Both sides have narrowed differences in key areas, especially after a negotiating team from the EU visited New Delhi from November 3 to 7 for discussions on the proposed FTA. During the talks, the two parties agreed to further accelerate efforts toward a balanced trade pact.

After the fourteenth round of talks in Brussels from October 6 to 10, both sides agreed that future discussions would take place through continuous and intensive engagements at the level of Chief Negotiators, with relevant experts joining virtually or in person, instead of holding full-fledged rounds for negotiations.

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.