India’s steel and aluminium exports to the EU plummeted 24.4 per cent in FY25, according to the Global Trade Research Initiative (GTRI). This drop occurs even before the EU’s Carbon Border Adjustment Mechanism (CBAM) duty comes into effect on 1 January 2026, suggesting early market consequences. Reporting rules on carbon emissions which were implemented from 1 October 2023 have already discouraged exporters from shipping to Europe. Steel was hit hardest: iron and steel exports declined 35.1 per cent to USD 3.05 billion, while aluminium exports fell 9.8 per cent.
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Rising costs and carbon price gaps
Ajay Srivastava, founder of GTRI, comments that this has been presented as a concession to India. But it is not a concession; Article 9 of the CBAM Regulation already allows such deductions for all countries. Even with India’s Carbon Credit Trading Scheme (CCTS), projected carbon prices will remain below USD 10/tCO₂ - well below the EU ETS benchmark of about USD 71/tCO₂. Consequently, exporters are heading towards a cost gap of ~USD 61/tCO₂, layering on top of already in-place anti-dumping and safeguard tariffs..
For example, stainless steel cold-rolled flat products from India already face provisional anti-dumping duties of 13.6–34.6%, with CBAM levies set to impose additional costs.
Aluminium and the EU’s green transition: emerging strains
The EU’s CBAM also presents challenges within Europe itself, particularly for aluminium. Used in solar panels, EVs, aerospace, and grids, aluminium is central to Europe’s green transition. Eivind Kallevik, President and CEO of Norsk Hydro, said, “The devil is in the details. This week, I spent two days in Brussels addressing a major loophole in CBAM’s rules for aluminium - one that risks undermining EU climate ambitions, security of supply, and the competitiveness of the European aluminium industry.” European Aluminium warns that without urgent reforms, CBAM could raise costs, reduce competitiveness and even worsen global emissions.
Experts urge negotiating transition flexibilities with Brussels to mitigate CBAM’s impact on Indian exports. Meanwhile, EU aluminium policy requires recalibration to protect strategic industries without backfiring on climate goals.
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