The European Union's new carbon levy on Indian steel imports has intensified trade tensions just as Brussels and New Delhi negotiate a potential EU‑India free trade deal. Under the EU's Carbon Border Adjustment Mechanism (CBAM), Indian steelmakers must now pay a fee for emissions they are not charged for at home — a move many in India view as protectionism.
At the same time, proposed higher EU steel tariffs and reduced duty‑free quotas threaten to make Indian exports less competitive, while European industry groups argue the measures are vital to protect jobs and counter rising import volumes.
Experts see possible compromises, from reallocating duty‑free quotas to supporting India’s emerging carbon pricing system and green‑industry investments. Yet even with a trade deal, the steel sector is expected to remain a major sticking point.