Zero-duty access secured for nearly all steel exports to EU: Govt

The potential access compares with around 3 million tonnes of steel exported by India to the EU in the past year. The quota arrangements under the different FTA mechanisms have been available from July, even though the India-EU FTA itself has not yet been operationalised, the official said.

The preferential access assumes significance as the EU has simultaneously tightened its steel import regime. In July, the bloc reduced the overall tariff-rate quotas for duty-free steel imports from all sources to 18.35 million tonnes, about 47% below the volume available under the earlier safeguard regime. Imports beyond the quota will face a 50% duty, compared with 25% under the previous arrangement.

The new regime could provide Indian steel exporters an advantage over major competitors such as China, which does not have an FTA with the EU, as well as other non-FTA suppliers, the official said.

Under the arrangement, India initially secured a country-specific quota of 946,616 tonnes. A further 300,000 tonnes was negotiated subsequently, taking the allocation to about 1.24 million tonnes. Since the additional volume was agreed after the FTA text had been finalised, the draft agreement continues to reflect the earlier figure of 946,616 tonnes, the official said.

In addition, the EU’s new steel import regime provides more liberal quota arrangements for countries with which it has FTAs. India has been allocated 694,853 tonnes under this preferential FTA component.

The FTA also provides Indian exporters access to additional competitive and residual quota pools, depending on the product category and utilisation of country-specific quotas (CSQ). These mechanisms could enable India to secure further duty-free volumes beyond its country-specific allocation.

Under the FTA Quota–CSQ mechanism, once an FTA partner exhausts its country-specific quota, exporters from that country can compete for an additional pool along with exporters from other EU FTA partners that have exhausted their respective quotas. The allocation is on a first-come, first-served basis.

A separate residual FTA quota provides another avenue for Indian exporters in eligible product categories, with access depending on the availability of unused quota from other FTA partners. Indian exports in these categories have been around 0.9 million tonnes, according to the official.

The quota arrangements cover a wide range of steel products, including hot-rolled and cold-rolled sheets, metallic and organic-coated steel, tin mill products, quarto plates, stainless steel products, bars, wire rods, pipes and tubes.

CBAM verification talks

Separately, India and the EU have begun discussions on recognising each other’s systems for verification and reporting of carbon emissions under the Carbon Border Adjustment Mechanism (CBAM), which will determine the carbon liability on steel and other covered imports into the EU.

Verification of emissions at the production stage has already begun and both sides are expected to engage over the coming year on recognition of verification processes, reporting systems and agencies, the official said.

“We have not waited for the FTA to get implemented and have already started the engagement. We have conducted three meetings on this with the EU,” the official said.

The EU has also opened the process for approving verification bodies from third countries, with six applications having already been filed. India would like to seek approval for 10 verification bodies that would be able to certify emissions from Indian production facilities, providing the data needed to calculate the CBAM liability of exporters.

Recognising Indian verification bodies is expected to be an important element in ensuring that Indian steel exporters can comply with the EU’s carbon requirements without having to rely exclusively on overseas verification agencies.