India Proposes Retaliatory Customs Duties on EU Steel Products Amid Trade Disputes

India has announced plans to impose retaliatory customs duties on certain EU imports, following unresolved disputes over the EU's safeguard measures on some steel products. According to a communication to the World Trade Organisation (WTO), India intends to increase tariffs on selected EU-originating products. This move comes after the EU's measures led to a trade loss of USD 4.412 billion for India from 2018 to 2023.

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The EU extended its safeguard duties on specific steel imports until 2026, with an out-of-quota duty of 25%. Initially imposed in 2018, these measures were extended until June 2024 and now further extended to June 2026. India, significantly impacted by these measures due to its substantial steel exports to the EU, has raised concerns at the WTO regarding this extension.

Impact on India's Steel Exports

India's iron and steel exports to the EU rose to USD 6.64 billion in 2023-24 from USD 6.1 billion in the previous year. Despite this increase, India remains concerned about the EU's safeguard measures, which it argues violate global trade rules and the WTO's Agreement on Safeguards. The country has expressed these concerns directly to the EU.

In response to similar issues, India proposed additional customs duties of 15% on imports from the UK in 2022. This was in retaliation for Britain's restrictions on steel products. The WTO, a Geneva-based body with 164 members, oversees global trade rules and resolves disputes among member countries.

Consultations and Negotiations

India and the EU have held bilateral consultations but failed to reach an agreement. Under WTO rules, if no compensation agreement is reached within 30 days of consultations, India can suspend concessions equivalent to the adverse effects of the EU's measures. This right is available under both GATT 1994 and the Agreement on Safeguards.

The EU's safeguard measures aim to protect its domestic steel industry from an influx of cheaper imports. These measures cover 26 categories of steel products, including various sheets and other key items. The Global Trade Research Initiative (GTRI) noted that these measures have significantly reduced India's export volumes to the EU since their implementation in 2018.

Challenges Facing India's Steel Industry

India's steel industry faces challenges from cheap imports from China and compliance with the EU's Carbon Border Adjustment Mechanism (CBAM), set for January 2026. GTRI highlighted that India's industry struggles with these imports while also dealing with reduced export volumes due to EU safeguards.

India is negotiating a free trade agreement with the EU to enhance trade and investment ties. In 2023-24, India's exports to the EU increased by 1.5% to USD 76 billion, while imports decreased by about 3% to USD 59.38 billion.

The EU's decision follows similar actions by the US during the Trump administration, which imposed additional duties on steel imports. In response, India sought consultations with the EU under WTO guidelines in 2019 regarding safeguard duties on certain steel products.

India exports around 6% of its steel output to Italy, an EU member state. The country's concerns stem from potential impacts on this significant export market due to ongoing safeguard measures and global trade dynamics affecting its steel industry.