Why in the News?

• India has secured country-specific tariff-rate quotas (TRQs) of about 1.64 million tonnes of steel products annually under its proposed Free Trade Agreement (FTA) with the European Union (EU).

What’s in Today’s Article?

• About Tariff-Rate Quota (Concept, India’s Steel Quota, EU’s New Steel Import Policy, Products, Covered)
• News Summary (Details of the Agreement)

About Tariff-Rate Quota

• A Tariff-Rate Quota (TRQ) is a trade policy instrument that allows a specified quantity of a product to enter a market at a preferential or lower tariff rate. Imports beyond the specified quota are subject to a higher tariff.
• In the India–EU arrangement, country-specific quotas provide Indian steel exporters with defined access to the EU market.
• Steel exported outside the applicable quota will face the duties prescribed under the EU's new steel regime.
• TRQs therefore combine market access with domestic industry protection.

India's Steel Quota under the FTA

• India has secured a total country-specific quota of 1,641,470 tonnes annually. This comprises:
  • 946,616 tonnes under the Most Favoured Nation (MFN) component
  • 694,853 tonnes under the FTA component
• India currently exports approximately 4 million tonnes of steel annually to the EU, making the quota an important consideration for the country's steel industry.
• The negotiated access is particularly significant because steel imports entering the EU outside the applicable quotas will attract a 50% tariff under the new regime.

EU's New Steel Import Regime

• The EU's new Steel Regulation came into force on July 1, 2026.
• It replaced the temporary safeguard measures introduced in 2018, which expired in June 2026, after reaching the maximum eight-year period permitted for temporary safeguards under World Trade Organisation (WTO) rules.
• The new regime seeks to protect the European steel industry from the effects of global overcapacity and potentially low-priced imports. It provides:
  • Duty-free tariff quotas of 18.3 million tonnes
  • A 50% duty on imports outside the applicable quotas
  • A melt-and-pour requirement aimed at improving transparency regarding the origin and production of steel
• Under the new system, MFN quotas are allocated based on each exporting country's average share of EU imports in individual product categories during 2022-24.

Steel Products Covered

• The country-specific quotas cover a broad range of steel products, including:
• Non-alloy and alloy hot-rolled sheets and strips.
  • Cold-rolled sheets
  • Metallic-coated sheets
  • Organic-coated sheets
  • Tin mill products
  • Quarto plates
  • Stainless steel products
  • Merchant bars and light sections
  • Reinforcing bars
  • Wire rods
  • Pipes and tubes
• The largest Indian country-specific quota is for non-alloy and other alloy hot-rolled sheets and strips, at 509,605 tonnes.
• This consists of 299,197 tonnes under the MFN component and 210,408 tonnes under the FTA component.
• Other significant quotas include 218,658 tonnes for cold-rolled sheets, 197,860 tonnes for metallic-coated sheets, and 186,038 tonnes for organic-coated sheets.

News Summary

• The negotiated steel access is significant because the EU is simultaneously strengthening protection for its domestic steel industry.
• The 1.64-million-tonne country-specific quota gives Indian exporters predictable access to the EU market despite the new 50% out-of-quota tariff.
• Of the total quota, nearly 6.95 lakh tonnes will receive access under the FTA component, while around 9.47 lakh tonnes will fall under the MFN component.
• The agreement also contains mechanisms to prevent India from being disadvantaged if the EU subsequently provides more favourable quota access to another FTA partner.
• India will have access to additional quota volumes in product categories where it already has a country-specific quota.
• These additional volumes will be allocated through competition among eligible EU FTA partners having country-specific quotas.
• For categories without an Indian country-specific quota, Indian exporters can access residual quotas, including general residual quotas and preferential quotas reserved for EU FTA partners.
• The EU has committed to administering the TRQs in a transparent, objective and non-discriminatory manner and making relevant information regarding their administration publicly available.

Review Mechanism

• The agreement provides for periodic review of the negotiated quotas.
• The first review will begin one year after the FTA enters into force, followed by subsequent reviews every five years.
• These reviews will consider market developments, quota utilisation and changes in the EU's steel regime.
• The agreement also provides for consultation with India if the EU proposes amendments to Product Specific Rules (PSRs) for products covered under its Steel Regulation.

Significance for India

• The arrangement provides Indian steel exporters with greater certainty and predictability in a major export market.
• At the same time, the benefits will depend on effective utilisation of the quotas. Since India currently exports around 4 million tonnes of steel annually to the EU, the negotiated access does not cover the entirety of existing exports.
• For Indian steel producers, therefore, the FTA provides an opportunity to preserve and expand market access while encouraging greater competitiveness, product diversification and compliance with evolving European trade regulations.