Steelmakers eye India–EU FTA relief on scrap imports amid CBAM hit

The EU is the world's largest exporter of steel scrap

• India-EU FTA to ease steel scrap imports for India's green steel transition
• EU's CBAM impacts Indian steel exports; FTA aims to help reduce emissions
• India-EU trade deal expected to be announced on January 27

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The India–European Union free trade agreement (FTA) will include provisions to ease imports of steel scrap, as Indian steelmakers seek to mitigate the impact of the EU’s carbon border adjustment mechanism (CBAM) and accelerate the shift towards low-carbon steelmaking, people familiar with the negotiations have told Moneycontrol.

According to industry sources, steel scrap will be part of the trade pact, expected to be announced on January 27, reflecting the growing importance of its availability for India’s green steel transition.

“Easier access to EU steel scrap will be addressed in the India–EU FTA,” said a senior steel industry source, requesting anonymity. “Domestic scrap availability is still inadequate, and imported scrap is critical for scaling up low-carbon steelmaking in India.”

The move comes as the CBAM, which came into force earlier this month, begins to reshape global steel trade. It imposes duties of up to 30 percent on carbon-intensive steel products, affecting most Indian steel exports to Europe.

While the EU has framed CBAM as part of its climate commitments, industry executives say it also shields European steelmakers facing weak demand from lower-cost imports originating in countries such as India, China, Vietnam and South Korea.

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Scrap matters

The 27-nation bloc has also introduced policy measures to curb export of steel scrap, seeking to retain feedstock for domestic producers as they ramp up green steel capacities. This has Indian steelmakers, who are increasingly relying on scrap for electric arc furnace (EAF)-based production, worried.

The EU is the world’s largest exporter of steel scrap, which is used as feedstock in EAF-based steelmaking, including in India.

While India’s industry is dominated by the blast- furnace route, leading producers are stepping up investments in cleaner technologies such as EAFs and direct reduced iron (DRI)-based processes.

Green push

According to the World Steel Association, EAF-based steelmaking has the lowest carbon emissions per tonne of steel produced. Companies such as Tata Steel and JSW Steel have announced significant EAF and DRI capacities which are expected to come on stream over the next few years.

In a recent investor call, JSW Steel’s management said it was evaluating the impact of CBAM on its European exports and had increasingly shifted focus towards the domestic market, with exports to Europe averaging around 1.3 million tonnes over the past few years.

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Tata Steel largely services its European demand through its IJmuiden facility in the Netherlands, while Jindal Steel is seeking to expand its European presence through a proposed acquisition of a majority stake in ThyssenKrupp’s European steel business.

According to a report by metal sales aggregation platform Metalbook, India exported about 3.71 million tonnes of steel products to the EU in 2024, led by alloy shipments. However, exports declined 31 percent during January–August 2025 from the year-ago period, as producers factored in CBAM-related costs and trade uncertainty.

Industry executives says assured access to EU scrap under the FTA will help Indian steelmakers reduce emissions, manage costs and remain competitive in export markets, as carbon intensity becomes a central determinant of global steel trade.

After prolonged negotiations that stretched over a decade, India and the EU are on January 27 expected to announce the conclusion of the proposed trade deal.