India’s free trade agreement with the UK is expected to be a big win for aluminium exporters, as it will remove the import duties. But there is also a catch. From January 2027, the UK will bring in its Carbon Border Adjustment Mechanism (CBAM) — a tax linked to carbon emissions. Industry executives warn this could claw back much of the benefit, leaving Indian producers struggling to keep prices competitive in the British market.
Role of FTA
The FTA eliminates import duties on aluminium products, which previously ranged from 2 per cent to 10 per cent in the UK market. Industry players expect this change will improve India’s competitiveness.
Vedanta Aluminium Chief Executive Officer Rajiv Kumar said, “With the FTA now in place, the aluminium industry aims to treble its export to the UK by 2030 from the current 21 kilotonnes per annum (KTPA), worth USD 93 million, to approximately 65 KTPA, valued at around USD 220 million.”
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