India-UK Free Trade Agreement Overcomes Steel Barrier; Majority of Indian Exports Protected from UK Restrictions
India has secured significant protections for its steel exports to the UK under the India-UK free trade agreement. An official statement revealed that 85% of India’s steel shipments will remain unaffected by the UK’s upcoming safeguard measures. This announcement coincides with preparations to operationalize the Comprehensive Economic and Trade Agreement (CETA) starting July 15.
Steel Safeguard Measures
The UK’s proposed steel safeguard regime had been a major hurdle in implementing the trade pact signed on July 24, 2025. The agreement reached between India and the UK aims to safeguard and promote bilateral steel trade. According to the statement, India’s interests are protected through a combination of country-specific quotas, residual quotas, and access under the Authorised Use Scheme (AUS).
Discussions regarding the UK’s steel measures, which are set to take effect on July 1, 2026, led to this consensus. The agreement is designed to protect commercial interests, minimize market disruptions, and ensure a balanced trading environment for exporters. Commerce and Industry Minister Piyush Goyal discussed these issues with UK Secretary of State for Business and Trade Peter Kyle on June 2.
Impact of New Tariff Regime
Under the new British regime, tariff-free steel imports will be limited starting July 1, with overall quota volumes reduced by 60% compared to the existing safeguard mechanism. Imports exceeding the quota will incur a 50% tariff. These measures will apply to steel products that can be manufactured within the UK. The revised framework further tightens the limits of the previous safeguard regime, which already imposed import quotas.
In addition to steel safeguards, India and the UK are addressing concerns related to Britain’s Carbon Border Adjustment Mechanism (CBAM), set to be implemented in 2027. Economic think tank GTRI estimates that Indian exports worth approximately USD 775 million could be impacted by the UK’s planned carbon tax on products such as iron, steel, aluminium, fertiliser, and cement.
The UK will become the second major economy to implement such a mechanism, following the European Union. Dubbed the Import Carbon Pricing Mechanism, it will initially cover sectors including iron, steel, aluminium, fertiliser, hydrogen, ceramics, glass, and cement. The tax could range from 14% to 24% of the import value once free allowances under the Emissions Trading Scheme (ETS) are fully phased out. India’s exports of iron and steel and related products to the UK totaled USD 893.4 million in 2025-26.
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