Indian steel exports to the EU could decline significantly after the launch of CBAM

Indian steel exports to Europe could decline significantly after the European Union introduces a cross-border carbon adjustment mechanism (CBAM), which will come into force on January 1, 2026. This was announced by industry representatives and analysts, according to Reuters.

Manufacturers have already begun looking for alternative markets, primarily in Africa and the Middle East.

Under the new rules, steel imports into the EU will be taxed based on the volume of emissions associated with production. In addition to steel, CBAM will also cover cement, electricity, fertilizers, and a number of other goods.

Europe is a key destination for Indian steel exports, with approximately two-thirds of shipments going to the EU market. However, most of India’s steel is produced in blast furnaces, which generate significantly more CO2 emissions than electric arc furnaces. According to Global Energy Monitor estimates, future expansion of blast furnace production could add about 680 million tons of CO2 equivalent.

Former Indian Steel Secretary Aruna Sharma stressed that companies recognize the need to modernize production, but at the same time are forced to look for new buyers. According to other experts, most companies do not yet understand how the tax will be calculated and whether it will depend on the specific manufacturer.

Analysts expect CBAM to increase the cost of Indian steel on the European market, especially products manufactured in blast furnaces, which will lead to lower margins and loss of market share.

To mitigate the impact, companies are stepping up their activities in the Middle East, where they offer flexible payment terms and fast delivery times. At the same time, the industry recognizes that in order to remain competitive in the EU market, manufacturers will have to accelerate the transition to less carbon-intensive technologies, such as electric arc furnaces.

It should be recalled that in October 2025, Ukraine became a net exporter of rolled steel. Exports of finished steel reached 0.6 million tons, which is 44.7% more than in October last year. At the same time, imports of finished steel amounted to 0.5 million tons, which is 55.6% less year-on-year.