The European Union and India have signed a long-awaited Free Trade Agreement (FTA),marking a significant step in bilateral trade relations. While the deal provides broad tariff reductions across industrial goods, its impact on steel — a crucial input for Belgian traders and distributors — will be incremental rather than transformational.
Steel Included, but Under Managed Access
Steel products are covered by the FTA but treated as a sensitive sector. Unlike many manufactured goods, steel will not benefit from immediate or full tariff elimination. Instead, the agreement introduces controlled market access, combining tariff-rate quotas with phased reductions for selected product lines.
As part of the deal, the EU will allow up to 1.6 million metric tons of Indian steel to enter duty-free, roughly half of India’s annual exports to the bloc. Imports beyond this threshold remain subject to standard EU tariffs and regulatory costs. This approach reflects persistent EU concerns over global steel overcapacity, price distortion, and competitive balance.
Climate Conditions Remain Central
The FTA does not alter the EU’s climate or enforcement framework:
- The Carbon Border Adjustment Mechanism (CBAM) continues to apply, requiring emissions reporting and, over time, carbon-related financial adjustments.
- EU trade defense instruments, including anti-dumping and safeguard measures, remain fully in force should import volumes rise sharply or market injury occur.
In parallel, the EU has committed €500 million in support to assist India in reducing industrial emissions, including in energy-intensive sectors such as steel. While this funding may support decarbonization over time, it does not exempt Indian producers from CBAM obligations.
Belgium’s Role
Belgium plays a pivotal role in EU steel logistics, with its big ports serving as key entry points and redistribution hubs for imported steel. Belgian traders are therefore likely to be among the first to feel the commercial effects of the agreement.
Market Outlook
European industry reaction to the FTA has been mixed and sector-specific. While sectors such as automotive and consumer goods welcome expanded access, heavy industry groups have voiced caution. They emphasize that the agreement must be “fair and reciprocal”, noting that EU markets are highly open while India maintains protective standards and procurement measures.
For steel, trade is already strongly skewed in India’s favor: nearly half of Indian steel exports go to the EU, up from 27% in 2022, and roughly seven times the EU’s exports to India. Associations warn that, without careful enforcement, the FTA could increase competitive pressure on EU producers and importers who operate under higher environmental and social standards.
Belgian traders may gain from duty-free quotas and phased tariff reductions, but outcomes will depend on:
- Access to the 1.6 million metric ton duty-free quota
- Product-specific tariff schedules
- Carbon intensity and CBAM compliance
- The continued application of EU safeguard and anti-dumping measures
In practice, Belgian steel importers could see incremental sourcing advantages, but must navigate a complex and regulated market.
Bottom line: the EU–India FTA creates new opportunities within well-defined limits. Traders who closely monitor quotas, compliance, and market signals are more likely to benefit, while the broader EU steel industry continues to face structural trade imbalances.
