Bad news for steel exporters: EU places India under 'pooled quota' after Trump's 50% tariff hike

While India's exports of steel products have already been affected by the US's fresh 50% tariff hike, the European Union's latest move is expected to have mixed consequences for Indian exporters. On Wednesday, EU has put India’s individual quota and placed it under a ‘pooled quota’ with other countries including China and Vietnam. The EU’s notification was submitted to the Committee on Safeguards at World Trade Organization (WTO), and the proposed changes will come into effect from 1 July and remain in effect till 30 June 2026 as per reports. 

Under the pooled quota, the country can export any quantity. And the amount of the exported product is deducted from the overall quota of the pool. EU has issued a pooled quota of 12, 500 tonnes, once it gets exhausted, 25 per cent tariff will charged on that additional amount. Reportedly, the EU has took the step to correct imbalances in the current quota system. These changes include removal of a 15% cap on any single country’s share of the pooled quota.

EU has restored separate duty-free country-specific quotas for major exporters like Ukraine, UK, Türkiye and Korea. Previously, it had removed country-wise quotas for these products in 2022 after Ukraine was unable to export due to the war with Russia. It followed a globalized system where all countries could export under a common quota. 

Although the exact figure for Indian exports of these particular products to the EU aren't readily available, Indian shipments of iron and steel articles, including 'category 17' products, reached $1.83 billion in FY25. This is significant as India is nearing the final stages of free trade agreement negotiations with the 27-nation EU bloc. The ‘product category 17’ covers angles, shapes and sections of iron or non-alloy steel.

According to a senior official, India will discuss the issue with the EU, as the notification has provided a window for consultations from 12 to 19 June, as reported by Mint. It is expected that India being placed alongside China in ‘pooled quota’ can risk losing their share as China can exhaust allocation early, according to Pankaj Chadha, Chairman of the Engineering Export Promotion Council (EEPC). It is also believed that residual quotas offers a limited but is important channel for Indian steel exports as it provide negotiation under India-EU free trade agreement. However, EU’s latest revision of steel import can also sparks discrimination against countries like India that lack dedicated quotas. With revision, EU has certainly locked India into a second tier access regime.