European Quota Squeeze: EU’s New Import Rules Threaten 40% Plunge in India's Steel Exports

European Quota Squeeze: EU’s New Import Rules Threaten 40% Plunge in India's Steel Exports​

India faces a significant challenge for its steel industry following the unveiling of new country-specific import quotas by the European Union. The European Commission’s revised safeguard regime could lead to an approximate 40 percent decline in Indian iron and steel exports to the EU, according to EEPC India. This stringent regulatory move comes despite strong growth seen in exports during FY26.

Impact of EU Tariff-Rate Quotas on Indian Exports​

The new regulations are expected to translate into an annual export loss estimated at $1.36 billion. This projection is based on India's total iron and steel exports to the EU, which amounted to $3.41 billion in FY26. The revised safeguard regime fundamentally alters the market access for Indian producers.

The European Union has reduced its overall tariff-free steel import quota by 47 percent. The new allocation stands at 18.3 million tonnes per year. Furthermore, the EU doubled the safeguard duty on any shipments that exceed this limit. Shipments exceeding the quota will now face a 50 percent safeguard duty, up from the previous 25 percent.

Market Segmentation and Product Category Access​

The European Commission’s country-specific allocations determined which product categories Indian exporters would benefit from most. India secured exclusive quotas in two specific areas. These include 92,556.8 tonnes for Category 14 (stainless bars and light sections). Another secured quota is 15,328.5 tonnes for Category 22 (other seamless tubes).

For the product category known as Category 15 (stainless wire rod), India does not possess an exclusive country allocation. Instead, Indian exporters are eligible to draw from the general quota reserved for the EU's free trade agreement partners. This differentiated access underscores the complexity of navigating the revised market rules.

Industry Perspective on Safeguard Regime Changes​

Pankaj Chaddha, chairman of EEPC India, described the new allocations as a "mixed bag." He confirmed that while some specialized areas offer better access, most product categories face severe restrictions. He noted that most other categories either received no additional quota or saw reductions generally aligned with the EU's overall 47 percent cut.

Chaddha highlighted that higher quotas were secured for certain MSME-based items, indicating a targeted effort to protect smaller producers in specific segments. However, he stated that the revised regime will primarily affect exports under HS Chapter 72 (iron and steel). The reduction across remaining product categories is anticipated to significantly impact sales volumes.

Competitive Challenges Under the New Safeguard Duty​

The threat of high duties poses a serious competitive challenge for Indian steelmakers in Europe. Once the limited country-specific quotas are fully utilized, any subsequent shipments from India will be subject to the higher 50 percent safeguard duty. This substantial increase makes many product categories significantly less viable and competitive in the European market.

This stringent policy framework is set against a backdrop of positive growth for Indian steelmakers. Iron and steel exports from India to the EU rose by nearly 12 percent in FY26, reaching $3.41 billion from the previous $3.05 billion recorded in FY25. This highlights the critical importance of the European market to the stability and revenue streams of the domestic industry.