New Delhi – India and the United Kingdom are pushing forward with Free Trade Agreement (FTA) negotiations, even as new UK steel import tariffs cast a shadow over the discussions. Indian Commerce and Industry Minister Piyush Goyal hosted UK Business and Trade Secretary Peter Kyle in New Delhi on Tuesday, focusing on the next phase of economic engagement between the two nations.
UK's New Steel Import Policy Raises Concerns
A primary point of contention in the ongoing talks is the UK's decision to implement new restrictions on steel imports, effective July 1, 2026. Under the new policy, tariff-free steel imports will be capped at 60% of previous levels. Any imports exceeding this quota will face a substantial 50% tariff, specifically targeting steel products also manufactured within the UK.
This move has drawn scrutiny within the UK Parliament, with questions raised in the House of Lords regarding its potential impact on the successful implementation of the UK-India FTA. Lord Leong, responding on behalf of the government, stated there was “absolutely no intention of undermining the benefits of the trade deal for any specific sector,” noting that tariffs are a last resort to protect domestic industry.
Adding to the complexity, the UK also plans to introduce a Carbon Border Adjustment Mechanism (CBAM) from 2027. This mechanism is expected to affect Indian exports of carbon-intensive products, including iron, steel, aluminium, fertilisers, and cement.
India Signals Potential Rebalance on Concessions
India has made it clear that if these steel tariff issues are not satisfactorily addressed, it may reconsider some of its own duty concessions under the proposed trade agreement. Notably, this could include a re-evaluation of duties on certain products such as Scotch whisky, a key British export. This approach highlights India's intent to protect its domestic industries and ensure a balanced outcome from the FTA.
Aiming for Doubled Bilateral Trade
Despite the current challenges, both countries remain committed to strengthening their economic ties. The Comprehensive Economic and Trade Agreement (CETA), signed in July 2025 after years of negotiation, aims to double bilateral trade to an ambitious $120 billion by 2030. The UK government emphasized that Secretary Kyle's visit was intended to advance a trading relationship already valued at £48 billion, recognizing the FTA's potential to boost both economies amidst global economic uncertainties.