India has received country-specific tariff-rate quota of 1.9 million tonne (mt) annually for steel exports to the European Union, while the government expects exporters to secure another 0.9 mt through residual quotas, taking the total to 2.8 mt, a commerce ministry official said on Thursday.
With this, India has secured over 80 per cent of its exports to the European Union (EU). Last fiscal, India exported about 3 mt of steel goods.
EU steel regulation sets duty-free quotas
The Tariff-Rate Quota (TRQs) follow the European Union’s Steel Overcapacity Regulation, which came into force on July 1 this year. It is aimed at ensuring protection for the EU’s steel industry against the effects of global overcapacity. It sets free-of-duty quotas at 18.3 mt, with a 50 per cent duty for out-of-quota imports and a melt-and-pour regime to enhance transparency.
As the regulation is in place from July 1, Indian exporters have already started availing the quota and shipping steel to the 27-nation bloc, the official said, adding that “free trade agreement benefits for the steel sector have been frontloaded”.
The exports under the quota are going at zero duty and beyond the available quota, the shipments face a 50 per cent tariff.
CBAM carbon charge to apply
“However, duty-free access will not mean cost-free entry. The EU’s Carbon Border Adjustment Mechanism, or CBAM, will apply to Indian steel both within and outside the quota. When fully phased in, the carbon charge could average about 35 per cent, according to estimates,” think tank GTRI said.
Wide range of steel products covered
The quotas cover a wide range of steel products, including non-alloy and alloy hot-rolled sheets and strips, cold-rolled sheets, metallic-coated sheets, organic-coated sheets, tin mill products, stainless steel products, merchant bars and light sections, rebars, wire rods, pipes and tubes.
As per the text, for product categories where India does not have a country-specific quota, it will have access to residual quotas, including general residual quotas open to eligible trading partners and preferential quotas reserved for EU FTA partners.
India-EU pact expected next year
India and the EU announced the conclusion of negotiations for the pact on January 27. It is expected to be signed by the end of this year and likely to be implemented next year.