India engages with EU over steel CBAM issues

India's commerce ministry is taking up the domestic steel industry's concerns about the EU's Carbon Border Adjustment Mechanism (CBAM) for steel and other commodities, according to steel ministry officials.

"We have had discussions with the ministry of commerce, who are in turn taking this matter up with the European Union," the steel ministry's secretary Nagendra Nath Sinha said on the sidelines of Federation of Indian Chambers of Commerce and Industry (FICCI) India Steel 2023 event.

"The engagement of the commerce ministry will be on formal lines. But in principle we think the EU should not force their standards because different countries have different levels of developments and therefore have different responsibilities," the secretary said.

India has been engaged with the EU over CBAM for the past year for steel and other commodities that can negatively impact exports from the country because of the carbon tax, steel ministry officials said.

The CBAM will enter a transitional phase from 1 October 2023 when importers of goods in the scope of the new rules will have to report their greenhouse gas emissions (GHGs). Once the permanent system is in force on 1 January 2026, importers will need to declare the quantity of goods imported into the EU in the preceding year and their embedded GHGs. They will then surrender the corresponding number of CBAM certificates, whose price will be calculated based on the weekly average auction price of EU Emissions Trading System allowances, expressed in €/t of carbon dioxide emitted. Europe is a major steel export destination for Indian mills.

The Indian steel ministry earlier this month approved 13 task forces to define the roadmap for green steel, in a step towards lowering carbon emissions from the industry. Indian steel producers have asked for policy enablers from the government to fuel production and adoption of green steel in the country.

"In the near future the government of the day may contemplate looking and putting in place the processes for steel producers of the country to dedicate a percentage of their production to making green steel and ensuring greater usage and promotion of the same in government projects," India's steel minister Jyotiraditya Scindia said in a virtual message during the event.

Indian steel ministry in an effort to diversify the sourcing of raw material, especially coking coal, have had discussions with Mongolia, Russia and Mozambique, Sinha said.

The secretary also said in regards to the steel industry's recommendation to include the Remission of Duties and Taxes on Exported Products scheme, which includes semi-finished steel products and flat-rolled products, the Commerce Ministry is operating on limited funds and steel is not as high a priority compared with other sectors for the export incentive scheme.

Predatory imports

Several steel producers also raised concerns during the FICCI conference over higher steel imports in the past year at predatory prices. India was a net importer of steel for six months in the 2022-23 fiscal year ending 31 March.

A slump in global steel prices last year prompted countries such as Russia, Vietnam, Japan, South Korea and China to export steel to India. Free Trade Agreements (FTAs) with some of these countries also made it easier and cheaper to import their steel. India will have to honor the FTA agreements but measures for steel standards and quality controls are still in place through the Bureau of Indian Standards, steel ministry officials said, adding the measures of anti-dumping and safeguards are open if a case is established, even with countries with FTA agreements.

By Sumita Layek