18 September 2025 – Is the so-called “big deal” between the Indian government and the European Union on CBAM really a deal, or just hot air? The EU’s external trade balance in steel was almost even in 2024.
CBAM: Is the EU-India Deal on CBAM Really a Big Deal?
The Indian government is once again celebrating itself for having negotiated a major deal in the planned EU-India Free Trade Agreement. The issue concerns the EU carbon tax CBAM, where India claims to have secured a special exemption for its companies. Specifically, the arrangement is that a carbon price already paid in India for emissions will be credited when CBAM goods are imported into the EU.
In the Joint Communication to the European Parliament and the Council on a New Strategic EU-India Agenda, it states:
“The EU and India have an opportunity to cooperate on developing a domestic carbon market to cut emissions and generate funds for the clean transition. India’s Carbon Credit Trading Scheme is advancing rapidly, and the EU can share lessons from its Emissions Trading Scheme on monitoring, reporting, verification, and sectoral benchmarks. A carbon price effectively paid in India will be deducted under the EU Carbon Border Adjustment Mechanism (CBAM) financial adjustment, which, being based on carbon content, will favour Indian exporters decarbonising their CBAM goods. This mechanism is also being simplified to benefit small businesses.”
Big deal or just hot air?
The supposedly major deal now being promoted is, however, under the EU CBAM Regulation of 2023, nothing more than what all other states with an emissions trading system will also receive. This is stated clearly in Article 9 of the Regulation.
“An authorised CBAM declarant may claim in the CBAM declaration a reduction in the number of CBAM certificates to be surrendered in order to take into account the carbon price paid in the country of origin for the declared embedded emissions. The reduction may be claimed only if the carbon price has been effectively paid in the country of origin. In such a case, any rebate or other form of compensation available in that country that would have resulted in a reduction of that carbon price shall be taken into account.”
In 2023, India boasted that it had negotiated exclusive exemptions from the Biden administration’s US Section 232 tariffs in a similar case – something that, on closer inspection, quickly evaporated. Unfortunately, in the end, all that remains of India’s supposed mega deal on CBAM is hot air.
EU external trade balance in steel almost even in 2024
The focus in steel is repeatedly placed on pure tonnage exported or imported. The actual value, however, is in most cases not mentioned. Yet the values in euros or dollars, compared with tonnage, are an important indicator of real developments in an industry.
Value of EU steel exports up 65% since 2015
A comparison between European steel imports and exports based on current data from the EU statistical office EUROSTAT for the year 2024 has now shown that the EU’s external trade balance in steel was almost even in terms of value. In addition, EU steelmakers were able to increase their export sales by more than 25% compared to 2021. Compared to the previous statistical base year of 2015, the increase in value per tonne of steel is even more than 65%.
US Section 232 tariffs not really a challenge?
And despite all the alleged challenges with the increased US Section 232 tariffs on steel and aluminium, exports by European steelmakers in the first six months of 2025 fell by only about 100,000 tonnes compared with the same period of the previous year. Compared with the statistical base year of 2021, exports by domestic producers in the first six months of 2025 are actually an impressive 46% higher.
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