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According to a Reuters report on December 5th, industry insiders and analysts say that with the EU's Carbon Border Adjustment Mechanism (CBAM) set to be officially implemented as a tax system on January 1, 2026, India's steel exports to Europe are expected to decline, and Indian steel mills have begun turning to alternative markets such as Africa and the Middle East to seek new buyers.
At that time, steel entering the European Economic Area will be subject to a decarbonization-oriented carbon tax, and products such as cement, electricity, and fertilizers will also be subject to the tax.
As the world's second-largest crude steel producer, India exports approximately two-thirds of its steel to Europe. Experts point out that Indian steel mills must reduce their carbon emissions.
Aruna Sharma, former Secretary of the Indian Ministry of Steel, stated, "We recognize the necessity of environmentally friendly production, and companies are preparing for compliance while also seeking alternative markets."
Most of India's crude steel production comes from blast furnace lines, whose carbon emission intensity is significantly higher than other processes, a point made clear in a speech by Sandeep Poundrik, Chief Official of the Ministry of Steel, in September. 30P120 Grain oriented electrical steel, He pointed out that the trend of building or expanding blast furnaces is cause for concern.
According to an assessment by the US research firm Global Energy Monitor, new steel capacity plans in India will generate approximately 680 million tons of CO2 equivalent in carbon emissions in the future.
Driven by government-led infrastructure investment, domestic demand continues to strengthen, and Indian steel companies still plan to further invest in expanding production capacity.
"Most companies are still exploring how to cope with CBAM," said Ravi Sodah, an industry analyst at investment firm Elara Capital. "In the short term, this will slow down Indian exports to Europe."
The industry generally believes that adopting lower-emission electric arc furnaces (EAFs) is one way to address CBAM.
Executives from two large Indian steel companies, speaking anonymously, said that their companies are still unclear about how the EU will calculate the carbon tax. 30P120 Grain oriented electrical steel, "About 60% of our exports go to Europe, and we need to know what the applicable tax rate will be and whether it will be levied on a company-specific basis," one executive said.
Lakshmanan R, head of South Asia and Southeast Asia at independent credit research firm Credit Sights, pointed out that the carbon tax will drive up the cost of Indian steel exports to Europe, particularly impacting blast furnace products with higher emissions. 30P120 Grain oriented electrical steel, If companies do not reduce emissions, they will face pressure on both profits and market share.
According to industry sources, to compensate for declining exports to Europe, Indian steel mills are actively expanding into the Middle East market, offering fast delivery and flexible payment terms to attract buyers.
