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Indian steel exports to the European Union are expected to decline significantly once the bloc’s Carbon Border Adjustment Mechanism (CBAM) becomes fully operational on 1 January 2026. The new regime will impose a carbon-based levy on imported steel, cement, electricity, fertilisers and other carbon-intensive goods, effectively raising the landed cost of higher-emission products.
Europe is currently the key destination for Indian steel, accounting for roughly two-thirds of India’s total steel exports. Most Indian mills, however, rely on the blast furnace–basic oxygen furnace route, which carries a much higher carbon footprint than electric arc furnace production. As a result, their products are likely to face steeper CBAM charges and lose price competitiveness in the EU market.
Industry representatives say producers have already begun reorienting exports toward alternative markets, particularly in Africa and the Middle East, even as they prepare for a longer-term transition to lower-carbon technologies. Former steel secretary Aruna Sharma noted that companies acknowledge the need for cleaner production but still lack clarity on how CBAM liabilities will be calculated and whether they will vary by producer.
Analysts warn that without accelerated investment in green steel pathways, India risks losing share in one of its most important export markets once the EU carbon border tax is in place.
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