After US Tariffs, Indian Steel Now Faces Tough EU Barriers

The EU recently announced that from April, it will reduce import of the metal to support its own industry. The Donald Trump administration has already announced the imposition of 25 per cent tariff on steel imports.

Even as Indian companies have less exposure to the US market, it is one of the top suppliers of finished steel products to the EU. The EU’s total imports of steel in 2024 stood at about 60 million metric tonnes. Half of the imports did not attract tariffs.

But with these protectionist norms kicking in, the going will not only get tougher for India’s iron and steel producers, but also dent exports of engineering goods.

While biggies such as the Steel Authority of India (SAIL), Tata Steel and JSW dominate steel production and exports, there are several producers categorised as small and medium as well. Needless to say that the smaller firms will be impacted more than the bigger players.

India’s Steel Exports To Face The Heat

“The new financial year will be very challenging for the Indian iron and steel industry and companies will feel the heat,” Pankaj Chadha, partner and CEO, Jyoti Steel Industries, and Chairman, Engineering Export Promotion Council (EEPC) told The Secretariat.

Chadha added that the smaller businesses which are already struggling with several problems including liquidity issues and increasing climate norms, would be the worst impacted.   

The EU has decided to reduce the liberalisation rate from 1 per cent to 0.1 per cent, a move that will limit imports of tariff-free steel. The Commission said that the measure “will create breathing space for EU steel producers to increase their production and thus regain lost market share. It also aims to increase employment and investment in green steel production.”

India’s iron and steel exports have been falling. The International Trade Administration data revealed that in 2024, India exported 9 million metric tonnes of steel, a 2.7 per cent drop from 9.2 million metric tonnes in 2023.

In 2024, the total value of exports of steel products at US$ 6.7 billion, reflected a drop of 34.4 per cent from US$ 10.2 billion in 2023.

EU’s Relaxed CBAM Rules Provide Some Relief

The EU’s decision to revise the Carbon Border Adjustment Mechanism (CBAM) rules have given some breather to Indian businesses and exporters, especially those dealing in hard to abate sectors such cement and chemicals among others besides iron and steel. The CBAM norms, driven by carbon tax, which were to be launched in 2026 will now be implemented a year later.

A senior government official told The Secretariat that the “situation is being closely monitored” to ensure that the exporters face limited impact.

“However, with the relaxation in CBAM norms, there will be more time for us to thrash out a strategy to deal with issues related to carbon tariff,” he said, adding that even if there has been a relaxation, eventually companies and other stakeholders need to move towards cleaner energy and move away from carbon dependent production,” the official said.

The government is closely monitoring the developments. Finance Minister Nirmala Sitharaman in her Union Budget for 2024-25 reduced the basic customs duty (BCD) for ferro-nickel and molybdenum ores — the key raw materials for steel industry — has been reduced to nil from 2.5 per cent as New Delhi scrambles for newer markets for exports.  

Immediate Challenges

The challenges and uncertainties for domestic iron and steel producers will increase in the new financial year. To add to the problem, the inventory levels have been steadily rising.

According to India Briefing, the rising inventory levels indicate that imported steel is displacing locally produced steel, posing a challenge for domestic manufacturers. “Additionally, falling international steel prices and an influx of low-cost Chinese steel have put further pressure on Indian steelmakers,” it said.

There is widespread apprehension that with such restrictive steel import norms, dumping of the metal could increase in India in the coming months. The Indian Steel Association (ISA) has already raised concerns over the issue.  

Action Taken

Meanwhile, several steel producers are aggressively looking to adopt clean energy, the Indian Steel Association noted. It said that not only are companies now using green energy but repurposing of waste materials has increased too.

“By repurposing waste materials, the steel industry is pioneering new pathways toward a greener, more efficient future. This innovation not only cuts greenhouse gas emissions but also improves efficiency and tackles plastic waste, reinforcing the steel industry's commitment to environmental responsibility,” ISA said in its social media handle X.

Apart from India, China, US, Japan and Russia are also top exporters of steel.