India-UK CETA 2026: Steel, CBAM issues stall rollout

What is holding up India-UK CETA implementation

India and the UK have reopened discussions on the key issues delaying the rollout of the Comprehensive Economic and Trade Agreement (CETA) signed on July 24, 2025. The talks come as both sides review implementation progress and confront new frictions linked to UK trade defence measures and climate-linked border taxes. Officials on both sides have indicated that, without resolution, operationalising the pact will remain difficult.

At the centre of the impasse are Britain’s planned tightening of steel import safeguards from July 1, 2026, and its decision to introduce a Carbon Border Adjustment Mechanism (CBAM) from 2027. Indian officials view both measures as potential constraints on market access that could dilute benefits expected under the agreement.

Agarwal-Brooks meeting: “sticking points” acknowledged

The issues were discussed in a meeting between India’s Commerce Secretary Rajesh Agarwal and UK Permanent Secretary Amanda Brooks. In a social media post, Agarwal said the two sides took stock of progress, worked through “sticking points”, and reaffirmed commitment to regular engagement for effective implementation.

The conversation is part of a broader set of engagements to move the agreement from signature to execution. Government sources have also signalled that India could consider rebalancing duty concessions offered under the pact on certain British products if its concerns remain unaddressed.

UK steel safeguard changes effective July 1, 2026

Britain’s revised steel safeguard framework is one of the most immediate issues, because it changes the trading conditions ahead of the pact’s implementation. From July 1, 2026, the UK will limit tariff-free steel imports by cutting overall quota volumes by 60% compared to the existing safeguard mechanism. Imports above the quota will face a 50% tariff.

The measure will apply to steel products that can also be manufactured in the UK. Earlier safeguards also involved import quotas, but the new framework reduces those quotas further, which has sharpened India’s concerns about predictability of access.

CBAM from 2027: clarity sought on scope and impact

The second hurdle is the UK’s CBAM, announced in December 2023 and set for implementation from 2027. Indian officials have indicated they want greater clarity on how the mechanism will apply to imports of emission-intensive products.

As described in the report, the measure is likely to impact Indian exports such as iron and steel, aluminium, fertiliser, and cement. India has raised concerns that a carbon border tax could work like a non-tariff barrier and reduce the effective gains expected from tariff concessions under the agreement.

India’s signal: tariff concessions could be rebalanced

Government sources and a senior Commerce Ministry official indicated India may revisit some duty concessions offered to the UK under the trade deal if the UK’s steel safeguard measures are not addressed. Products cited as examples include Scotch whisky.

Officials have described this as a possible rebalancing rather than an announced action, with no final decision taken. The warning is meant to underline that implementation is linked not only to administrative rollout but also to whether the market-access balance negotiated in 2025 holds under subsequent policy changes.

High-level talks: Chris Bryant and Peter Kyle meetings in Delhi

The sticking points are expected to be discussed during the India visit of UK Minister of State for Trade Policy Chris Bryant on June 2. Bryant is scheduled to hold a bilateral meeting with Commerce and Industry Minister Piyush Goyal, according to sources.

Separately, as talks continued, the UK Business and Trade Secretary Peter Kyle met Goyal in New Delhi. The UK Parliament also saw a question on the issue, and Lord Leong responded that the government had “absolutely no intention of undermining the benefits of the trade deal for any specific sector”, while noting the push to implement the FTA as soon as possible.

Key facts at a glance

Why the steel issue matters for trade flows

Steel safeguards are an immediate operational constraint because they apply at the border and change the cost of shipments once quota thresholds are crossed. A 50% tariff on volumes above quotas raises landed costs sharply, which can affect competitiveness for exporters even if headline tariff concessions exist under CETA.

The report also highlights that the safeguard tightening applies to steel products that can be made in the UK, tying the policy directly to domestic industry protection. Indian officials have argued that such measures were not part of the original negotiations and could reduce the effective value of the deal for Indian exporters.

Trade exposure: India’s steel exports to the UK

India’s exports of iron and steel and related products to the UK stood at USD 893.4 million in 2025-, as cited in the report. That figure provides context for why the steel safeguard changes have become a priority topic for negotiators.

Market impact: what changes immediately, and what is pending

For companies exposed to UK-bound steel trade, the key near-term variable is how the reduced tariff-free quotas are allocated and administered from July 1, 2026, and how quickly bilateral talks can deliver relief or adjustments. The CBAM is a later-dated measure, but its planned start from 2027 makes it a live issue for exporters in emission-intensive sectors that require long planning cycles.

On the UK export side, the report notes India’s indication that tariff concessions on some British products could be reconsidered if the steel duty issue is not addressed. That signal introduces uncertainty around specific product-level concessions even though no final change has been announced.

Why this matters: implementation depends on resolving policy frictions

The deal was signed in July 2025, but implementation is now tied to whether subsequent UK policy choices are seen as consistent with the negotiated market-access balance. The steel safeguard tightening is framed as a new barrier that could erode negotiated gains, while the CBAM is seen as a compliance and cost layer that could reduce the effective benefit of lower tariffs.

Commerce Secretary Agarwal has indicated that officials are working on a “creative solution” to resolve the steel dispute and operationalise the deal quickly. The immediate focus now shifts to the June 2 meetings, where steel safeguards and CBAM are expected to be discussed prominently.

Conclusion

India and the UK are pushing to move CETA from signature to implementation, but UK steel safeguards from July 1, 2026, and the planned CBAM from 2027 have emerged as decisive sticking points. With UK trade minister Chris Bryant due in Delhi on June 2 for talks with Piyush Goyal, the next round of meetings will test whether the two sides can find a workable path to rollout without reopening the broader bargain.