India is pressing the European Union for last-mile concessions in the ongoing Free Trade Agreement (FTA) negotiations, seeking flexibility in meeting Carbon Border Adjustment Mechanism (CBAM) obligations and higher quotas for concessional steel exports, as both sides aim to push the talks “significantly towards conclusion” this month.
India’s chief trade negotiators are currently in Brussels and will be joined by Commerce and Industry Minister Piyush Goyal on Thursday to inject political momentum into the discussions. The visit comes ahead of European Commission President Ursula von der Leyen and European Council President Antonio Costa’s planned attendance at India’s Republic Day celebrations later this month, during which officials hope to announce substantial progress on the long-pending FTA.
Goyal is scheduled to hold high-level talks with EU Commissioner for Trade and Economic Security Maros Sefcovic. According to an official statement, the engagement aims to provide strategic direction to negotiators, resolve outstanding issues, and accelerate the conclusion of a “balanced and ambitious” agreement.
CBAM Concerns Take Centre Stage
Mitigating the impact of the EU’s CBAM has emerged as one of India’s top priorities. The mechanism, designed to prevent “carbon leakage” by aligning the carbon cost of imports with that borne by EU producers under the Emissions Trading System (ETS), applies to carbon-intensive products such as steel, aluminium, cement and fertilisers.
Industry estimates suggest that exporters from countries without a comparable carbon pricing regime, including India, may need to cut prices by 15–22 per cent to absorb CBAM-related costs and remain competitive in the EU market.
While the EU is unlikely to grant outright exemptions under CBAM, Indian negotiators are seeking recognition of alternative offset mechanisms. These include acknowledging India’s domestic carbon reduction initiatives, energy taxes, and the upcoming Carbon Credit Trading Scheme (CCTS), which is slated for phased implementation from 2026. India is also developing a rate-based emissions trading system.
Steel Quotas and Market Access
India is also urging the EU to expand reduced-duty quotas for steel imports, including by reallocating unused quotas from other countries. Such a move, officials believe, could help offset some of the competitiveness loss stemming from CBAM.
For its part, the EU is seeking greater market access in sensitive sectors such as automobiles and dairy, areas where India has traditionally maintained higher levels of protection.
Trade Stakes Remain High
The financial obligations under CBAM formally came into force on January 1, 2026, requiring EU importers of covered goods to purchase certificates reflecting the embedded carbon emissions of imports.
India’s bilateral goods trade with the EU stood at $136.53 billion in 2024–25, with exports worth $75.85 billion and imports at $60.68 billion, making the bloc India’s largest trading partner for goods.
With rising uncertainty in global trade and the impact of higher tariffs imposed by the United States, both New Delhi and Brussels are keen to conclude the FTA at the earliest, viewing it as a strategic hedge against an increasingly volatile global trade environment.
