The EU’s Carbon Border Adjustment Mechanism is emerging as a structural test for India’s steel export model. Carbon intensity, verification credibility and product exposure to EU demand are set to determine market access from 2026 onwards, speakers said during a recent webinar.
The first meaningful CBAM financial settlement will occur in 2027, based on emissions embedded in 2026 shipments for Indian exporters. Carbon costs are therefore expected to be reflected increasingly in product selection and customer pricing, rather than absorbed uniformly across export volumes, Kallanish notes.
Sentra.world’s co-founder and chief executive, Harsh Choudhry, said CBAM exposure could ultimately account for 10-20% of product cost for carbon-intensive steel once EU free emissions allocations decline.
Product exposure is uneven and concentrated in EU-facing flat steel grades. Cargill regional trading lead Ankur Mishra said around 50% of India’s hot rolled coil and plate exports are directed to Europe. While this represents a sizeable share, these volumes can be more easily diverted to Asian markets if EU economics weaken.
By contrast, dependence is far higher for downstream flat steel, as 95% of India’s CRCA exports and 80% of coated steel shipments, including galvanised and other value-added products, are sold into Europe.
Switching economics further amplify this risk as the price gap between selling HRC into Europe versus Asia is currently around $30/tonne, making diversion feasible. However, for CR and coated products, Europe offers a much higher premium that cannot be easily substituted in Asian markets.
Benchmark emissions for blast furnace-based steel are set at around 1.37 tonne of CO₂/t, while actual emissions for many Indian installations are closer to 2.1 tCO₂/t. When verified emissions data are accepted, this implies a CBAM cost of roughly €65-70/t for HRC and downstream coated products. If EU authorities apply default emissions values, the CBAM burden could escalate to €250-300/t, materially undermining competitiveness.
This places verification credibility at the centre of India’s export outlook. JSW Steel vice president of corporate sustainability Swaroop Banerjee said Indian mills are largely capable of generating verified emissions data, but EU buyers remain cautious as audit rules evolve.
Exports to the EU from carbon-intensive regions such as India and China will be affected as CBAM removes the price advantage of traditional production routes, Banerjee added.
Any perceived weakness in data integrity allows EU authorities to impose default values, effectively turning CBAM into a non-tariff barrier for Indian flat steel.
Despite these pressures, exports are unlikely to face an immediate collapse. Indian mills retain some ability to absorb CBAM costs of up to around €150/t, particularly for coated and value-added flat products that already command premiums in Europe. This buffer is expected to narrow steadily towards 2030 as free allocations are phased out.
Verification capacity may itself become a constraint. Bureau Veritas’ Anirban Chatterjee said only auditors accredited by EU-recognised national bodies can conduct CBAM verification. While interim pre-verification is possible, accredited audits will be mandatory for final compliance.
