EU-India cooperation on steel decarbonisation: market access considerations and beyond

On 27 January 2026, after nearly two decades of negotiations, India and the European Union
(EU) concluded a landmark free trade agreement alongside a Joint EU–India Comprehensive
Strategic Agenda. The EU’s Carbon Border Adjustment Mechanism (CBAM) emerged as a
major point of contention during the negotiations. While the final agreement does not grant
the CBAM exemptions sought by India, it reflects a balanced compromise: both sides agreed
to deepen cooperation on technical aspects of CBAM implementation. More broadly, the
agreement establishes a framework for aligning trade and climate objectives, with the
potential to reshape clean value chains and accelerate sustainable industrial transformation.

India’s steel sector lies at the heart of this transition. As the fastest-growing steel industry
globally, India is projected to account for 20% of global steel production by 2050, up from
around 5% today. At the same time, it remains among the most carbon-intensive, with
emissions per tonne of steel approximately 30% higher than the global average.
Decarbonising this sector is therefore essential not only for achieving India’s 2070 net-zero
target but also for advancing global climate mitigation efforts.

The EU-India agreement provides a unique opportunity to build a forward-looking
partnership that integrates trade, climate, and industrial policy. It opens avenues for deeper
collaboration in green technologies, industrial innovation, climate finance, and low-carbon
value chains. In this context, green steel can become a strategic pillar of the EU-India
cooperation, aligning economic interests with climate ambitions.

This project examines how EU-India trade can support the decarbonisation of India’s steel
sector. It does so on two levels. First, it analyses the implications of CBAM and other
emerging EU measures—such as ecodesign requirements, low-carbon steel standards, and
trade defence instruments—on the competitiveness of Indian steel exports. Second, it moves
beyond a narrow focus on regulatory impacts to explore how trade, technology, investment,
and financial cooperation can be more strategically leveraged to address India’s structural
decarbonisation challenges. In doing so, the project reframes EU-India cooperation around a
shared objective: enabling a sustainable transformation of the world’s fastest-growing steel
market.