The safeguard measure and the UK’s carbon border adjustment mechanism (CBAM) have become a sticking point in the implementation of the Comprehensive Economic and Trade Agreement (CETA), which was signed on July 24, 2025.
“Talks are going on, and the progress is good. We have ironed out one of the three issues. On the second and third issue, they (UK) have given us some proposals, we (India) have given some counter questions. Both teams are working on that,” the official said without disclosing details of the issues.
When asked if Commerce and Industry Minister Piyush Goyal will travel to London, the official said: “If things get ironed out, then maybe”.
India and the Joint Economic and Trade Committee (JETCO) meeting is expected to be held later this month in Britain.
On June 2, Goyal held talks with UK Secretary of State for Business and Trade Peter Kyle on these issues.
From July 1, 2026, the UK will limit tariff-free steel imports, reducing overall quota volumes by 60 per cent compared to the steel safeguard measure. Any imports above these levels will then face a 50 per cent tariff.The measure will apply to imports of steel products that can also be made in the UK.
Earlier, Britain had safeguard measures that also imposed import quotas. The new measures reduce that quota.
The UK government in December 2023 also decided to implement its Carbon Border Adjustment Mechanism (CBAM) starting in 2027.
According to economic think tank GTRI, India’s exports worth $775 million to the UK may be impacted due to Britain’s decision to introduce a carbon tax on products like iron and steel, aluminium, fertiliser and cement, from 2027.
The UK, after the European Union (EU), will be the second economy to implement CBAM. The UK calls the move the import carbon pricing mechanism, which will initially focus on sectors like iron, steel, aluminium, fertiliser, hydrogen, ceramics, glass, and cement.
This tax could range from 14-24 per cent of the import value on full phase-out of free allowances under the ETS (Emission Trading System).
India’s exports of iron and steel and their products to the UK stood at $893.4 million in 2025-26, accounting for a significant share of $13.4 billion in total merchandise exports to the UK.