Team siliconindia

• EU’s new carbon tax will increase the cost of Indian steel imports, reducing competitiveness in the European market.
• Indian steelmakers are shifting focus to Africa and the Middle East to compensate for expected export losses to Europe.
• The industry is under growing pressure to cut emissions and adopt cleaner technologies to remain globally competitive.

India’s steel exports to Europe are expected to fall next month as the European Union’s carbon tax comes into effect. The levy, part of the EU’s Carbon Border Adjustment Mechanism (CBAM), will significantly raise the cost of exporting Indian steel, pushing mills to find new buyers in Africa and the Middle East.

Starting January 1, steel shipped into the European Economic Area will be taxed based on its carbon footprint. The rule also applies to cement, electricity, fertilizers, and other high-emission products. Europe currently accounts for nearly two-thirds of India’s steel exports, making the impact on Indian mills substantial.

Industry leaders say the change highlights the urgent need for greener production. Former steel secretary Aruna Sharma said companies are preparing to adopt more environmentally friendly methods but are also actively scouting new global markets to manage the shift.

Much of India’s steel is produced using blast furnaces, which emit far more carbon compared to electric arc furnaces. Government officials have raised concerns that future capacity expansion based on blast furnaces could lead to a sharp rise in emissions. Global Energy Monitor estimates upcoming capacity additions could add up to 680 million metric tons of CO₂ equivalent.

Also Read: Centre Streamlines Approval Process for Coal and Lignite Exploration

While steelmakers plan to boost capacity to meet strong domestic demand, many are still unclear about how the EU will calculate the carbon tax. Executives say the lack of clarity makes planning difficult.

Analysts expect India’s EU-bound exports to slow in the short term. To offset the hit, mills are offering faster deliveries and flexible payment terms to buyers in the Middle East, hoping to secure new long-term contracts.