India seeks $900 million steel quota as UK curbs stall trade deal rollout

India is seeking a steel export quota worth nearly $900 million in the UK market under the bilateral free trade agreement (FTA) signed in July 2025, as New Delhi attempts to break a deadlock over fresh British restrictions on steel imports that have delayed the pact's implementation.

Although negotiations for the trade agreement were concluded nearly a year ago, disputes over the UK's steel safeguard measures have emerged as a major obstacle to its rollout.

The Indian steel industry has urged the government to secure a tariff-free quota equivalent to the average value of steel and steel product exports to the UK over the past three years. Industry representatives argue that the quotas announced by the UK would restrict even current export volumes, undermining the benefits expected from the FTA.

"Our quota needs to be at least the average of the last three years' exports. The quota announced by the UK, which is set to come into effect on July 1, is far below that level, and the steel industry will end up suffering despite the FTA. The industry would take a significant hit in at least six categories where India has strong export interests. Our exports are far higher than their proposed quota," a source was quoted as saying.

Government officials indicated that India could consider retaliatory measures, including curbs on Scotch whisky imports, if the UK's actions adversely affect Indian commercial interests.

Even after concluding trade negotiations, Indian industrial exports continue to face regulatory hurdles in the UK. Officials said the immediate concern is the revised steel quota regime, which takes effect on July 1. Another challenge looms in the form of the UK's Carbon Border Adjustment Mechanism (CBAM), scheduled to come into force on January 1, 2027.

The Ministry concerned did not respond to queries seeking comment.

Under the CBAM framework, the UK will impose a carbon price on imports of some of the most emissions-intensive industrial products, including aluminium, cement, fertilizers, hydrogen, iron and steel. The British government has also indicated that the scope of the mechanism could be expanded in the future.

"The sectoral and product-level scope of the CBAM will be kept under review beyond 2027 as new evidence comes to light to reflect changes to carbon leakage risk, as well as methodological and technological advances," the UK government said in a statement.

India exported iron, steel and related products worth $893.4 million to the UK in 2025-26, accounting for a sizeable share of the country's total merchandise exports of $13.4 billion to the British market.

In March 2026, the UK tightened its steel import safeguards, citing concerns over global overcapacity and pressure on domestic manufacturers. It reduced tariff-free import quotas and increased duties on shipments exceeding those limits from 25% to 50%.

Trade experts said such measures are often introduced to prevent trade diversion following similar actions by major economies. Both the European Union and the United States have also raised tariffs on steel imports beyond quota limits to 50%. However, analysts noted that the UK's domestic steel manufacturing capacity remains relatively limited.

According to a Reuters report, the steel sector contributed just 0.1% to the UK's economic output in 2024 but supported around 37,000 jobs. Many of these jobs are concentrated in traditional industrial regions that form a key political base for Prime Minister Keir Starmer's Labour Party.

The issue has gained added political significance as Starmer faces mounting domestic pressure after Labour suffered heavy setbacks in local elections across the country.