EU Carbon Tax to Hit Indian Steel Exports, US Tariffs Have Limited Impact

India’s steel exports are set to face pressure from the European Union’s carbon tax, while US tariffs are expected to have little impact, according to Steel Secretary Sandeep Poundrik. Speaking at the FT Live Energy Transition Summit India on Wednesday, he noted that two-thirds of India’s steel exports are bound for Europe, whereas exports to the US remain negligible.

The EU’s Carbon Border Adjustment Mechanism (CBAM), which taxes imports of high-carbon goods such as steel, aluminium, and cement, poses a major challenge. India has requested an exemption but expects the rules to weigh on competitiveness.

Blast Furnace Emissions a Concern

Poundrik explained that Indian steel production relies heavily on blast furnaces, which are emission-intensive. This dependence makes Indian exports particularly vulnerable under CBAM. He cautioned that further expansion of blast furnace capacity is a concern, given the global shift towards low-carbon production.

“The limits of carbon emission, which are proposed in CBAM, will definitely impact the exports,” he said.

Domestic Measures Against Cheap Imports

Alongside export challenges, India is also grappling with rising imports. Poundrik said the government is reviewing import tariffs, locally known as safeguard duty, to protect the domestic industry.

Last month, India proposed a three-year tariff of 11%–12% on certain steel products in an effort to curb shipments from top global producer China. A final decision is expected soon.

With Europe tightening carbon rules and China exporting aggressively, India’s steel industry faces a balancing act—managing external risks while ensuring competitiveness at home.

with inputs from Reuters