India Braces for a Steel Export Slump as Europe’s Carbon Tariff Takes Hold

Core Viewpoint - The implementation of a carbon tax on imports in the European Union, known as the Carbon Border Adjustment Mechanism (CBAM), is expected to significantly reduce Indian steel exports to the EU, prompting producers to seek alternative markets [1][5]. Group 1: Impact on Indian Steel Exports - The CBAM will lead to a sharp decline in Indian steel exports to the EU, which currently accounts for 66% of India's steel output [3]. - Indian steel production primarily relies on coal-fueled blast furnaces, which do not align with the EU's emission reduction goals, making compliance challenging [4]. - Analysts indicate that the transition to more environmentally friendly production methods, such as electric arc furnaces, will require time and investment [4][5]. Group 2: Industry Response and Adaptation - The corporate sector has lobbied for concessions from the EU to enhance their competitiveness, resulting in the establishment of the CBAM [2]. - Companies are actively exploring alternative markets while preparing to meet environmental production standards [3]. - The timing of the CBAM's implementation coincides with Europe's rearmament efforts, which heavily depend on steel, potentially complicating the situation for European industries [5].