India looks to Middle East, Asia to cushion EU carbon tax blow to steel exports

NEW DELHI: India is seeking new steel export markets in the Middle East and Asia to offset the impact of the European Union’s carbon tax that took effect in January, a government source said.

India, the world’s second-biggest producer of crude steel, ships roughly two-thirds of its steel exports to Europe, where flows have come under pressure following the EU’s Carbon Border Adjustment Mechanism.

Last week, Steel Secretary Sandeep Poundrik said the government would have to take action to support exports hit by Europe’s carbon tax.

“For exports, we are looking at new markets and we are trying to get agreements with countries in the Middle East where a lot of infrastructure is coming up, and also in Asia,” said the source directly involved in decision-making, declining to be identified as the deliberations are confidential.

“Till now, our exports were focussed on Europe but we are trying to diversify,” the source added.

India’s federal Ministry of Steel did not respond to an email seeking comment.

India steel exports grow by a third between April-December, govt data shows

Mills are looking for government support to help them compete in non-EU markets where China has been dominant, a senior executive at a major steel firm said.

Steel exports from China, the world’s largest producer, have been resilient since 2023 and hit a record monthly high in December. Beijing plans to roll out a licence system this year to regulate alloy exports, as strong shipments have fuelled a growing protectionist backlash globally.

Securing raw material

Explaining India’s widening efforts to secure supplies of raw materials such as coking coal, limestone, manganese and other critical minerals, the source said New Delhi was increasingly pursuing long-term offtake agreements and asset acquisitions.

State-run Steel Authority of India (SAIL) and miner NMDC are looking at Brazil, Argentina, Australia and the Middle East, the source said.

SAIL and NMDC did not respond to emails seeking comment.

“For coking coal asset acquisition, we are looking at Australia,” the source said.

Currently, around 95% of the sector’s coking coal requirements is met through imports, with Australia supplying more than half.

Last year, NMDC said it was exploring coking coal assets in Indonesia and Australia.