Product-level allocations published under the India and European Union free trade agreement show steel quotas roughly 300,000 tonnes below what New Delhi already holds under Brussels’ new import regime, and Indian mills are asking their government to reopen the numbers.
NEW DELHI, September 20, 2026
The steel tariff-rate quotas negotiated under the free trade agreement between India and the European Union, presented when the deal was concluded as a significant widening of Indian access to the European market, are smaller in aggregate than the entitlements India already holds under the European Union’s new steel import regime.
That conclusion has emerged over recent days as detailed product-level allocations circulated and were compared against the country-specific quotas Brussels assigned to India in June 2026 under the steel regulation that replaced the expiring safeguard. The comparison shows the total guaranteed country-specific allocation under the agreement at 1.64 million metric tons, roughly 300,000 tons below India’s current entitlement.
Indian producers have responded by pressing their government for a revision. According to a Reuters report, the Indian steel industry is seeking quotas 29 to 35 percent higher across product categories. A note submitted to India’s trade ministry and reported by the agency states that India’s total guaranteed country-specific quota under the agreement is smaller than its current total entitlement, putting the country in an unfavourable position with regard to market access.
The timing is uncomfortable. On September 11, 2026 the European Commission presented its proposals to the Council for the signature and conclusion of the agreement, describing it as the largest trade deal ever concluded by either party. Council authorisation and European Parliament consent are still required before the agreement can enter into force.
The arithmetic
The disputed figures are specific and checkable.
Under the agreement, India’s total guaranteed country-specific steel quota is 1.64 million tons, composed of a most-favoured-nation component of 946,616 tons and a preferential free trade agreement component of 694,853 tons. When the headline was first reported, the natural reading was additive. India would keep its most-favoured-nation share of the European quota pool and gain a preferential allocation on top.
The product-level detail told a different story. Set against the country-specific quotas allocated to India under the European steel regulation in June 2026, the agreement’s totals are lower in every major category.
For hot-rolled coil, the agreement provides a most-favoured-nation allocation of 299,197 tons and a preferential allocation of 210,408 tons, for a total of 509,605 tons. The June 2026 allocation under the steel regulation was 299,196 tons on the most-favoured-nation side and 298,077 tons on the preferential side, totalling 597,274 tons. The shortfall is 87,669 tons, or about 15 percent.
For cold-rolled coil, the agreement totals 218,658 tons against 269,974 tons in June, a gap of 51,316 tons. For metallic coated sheets in category 4A, the agreement provides 197,860 tons against 233,183 tons, a gap of 35,323 tons. For organic coated sheets, 186,038 tons against 217,337 tons. For stainless bars and light sections, 79,278 tons against 92,556 tons. For gas pipes, 34,346 tons against 40,147 tons. For seamless stainless tubes and pipes, 13,140 tons against 15,328 tons. For other welded pipes, 20,946 tons against 24,634 tons.
The pattern is consistent. In every case the most-favoured-nation component is essentially unchanged, differing by a single tonne in several categories, while the preferential component under the agreement is materially smaller than the preferential allocation India received in June.
That consistency is itself informative. It suggests the divergence is not a drafting error in one line but a difference in the base period, reference volumes or methodology used to calculate the preferential tranche in the agreement, as against the methodology the Commission applied when it issued allocations under the steel regulation three months earlier.
How the two regimes interact
Understanding the dispute requires understanding what changed in Europe on July 1.
Regulation (EU) 2026/1384, published in the Official Journal on June 24, 2026, entered into force on June 25 and applied from July 1, replacing the steel safeguard that had governed European imports since 2018 and that expired at the end of June. The new regime cut the total volume of duty-free import quotas by approximately 47 percent compared with the 2024 reference system, and raised the duty applied to out-of-quota volumes to 50 percent.
For Indian exporters, that was already a significant contraction. The ratings agency Crisil estimated that the European Union’s tighter steel import quota was likely to hit Indian steel exports by around 30 percent. India has been among the larger suppliers of flat steel to Europe in recent years, and European demand had partially offset the loss of other markets.
The free trade agreement was, in that context, supposed to be the offsetting good news. A preferential quota negotiated bilaterally, sitting alongside the most-favoured-nation allocation, would give Indian mills a protected channel into Europe that competitors without an agreement would not enjoy.
The published allocations complicate that story. If the agreement’s country-specific total is smaller than the current entitlement, then ratification would, on the face of the numbers, reduce rather than expand Indian access for steel, even as it delivers substantial gains elsewhere in the agreement.
What the agreement does deliver
The steel quota question should not obscure the scale of the broader deal, which is considerable on both sides.
For European exporters, the agreement eliminates or reduces tariffs on 96 percent of European Union goods exports to India, with the Commission estimating annual duty savings of around 4 billion euros. Indian tariffs on motor vehicles, which have reached as high as 110 percent, fall to as low as 10 percent over time, subject to quotas, with duties on selected vehicles priced above 15,000 euros reduced immediately and car parts eventually becoming duty free.
For Indian exporters, the agreement grants preferential access to 97 percent of European Union tariff lines, covering 99.5 percent of trade value, with more than 70 percent of tariff lines seeing immediate duty elimination. For labour-intensive Indian export sectors, textiles and apparel, leather goods, footwear, gems and jewellery, marine products and engineering goods, immediate duty elimination against competitors who still pay the common external tariff is a material competitive gain.
Negotiations ran for nearly two decades before concluding on January 27, 2026. The agreement is the largest either party has signed. Measured across the whole tariff schedule, the steel chapter is a small component.
It is not, however, a politically small component. Steel in India is a sector with concentrated ownership, significant public sector presence, strong industry associations and direct lines to the Ministry of Steel and the Ministry of Commerce and Industry. A perception that Indian negotiators accepted a reduction in steel market access while granting automotive tariff concessions to European manufacturers is precisely the kind of narrative that can complicate domestic ratification politics.
The negotiating dynamic now
Two ratification processes are running in parallel and they are not symmetrical.
On the European side, the Commission has made its proposals and the Council must authorise signature, after which the European Parliament must give its consent before conclusion. That sequence provides multiple points at which member states and parliamentarians can raise objections, but it does not naturally provide a mechanism for reopening negotiated schedules. Reopening a concluded text is difficult in any trade agreement and doubly so in one that took nearly twenty years to reach.
On the Indian side, the request from industry for 29 to 35 percent higher quotas is directed at the trade ministry rather than at Brussels. New Delhi’s options include seeking clarification of how the preferential allocations were calculated, seeking an interpretative understanding on how the two regimes interact, or seeking an adjustment through whatever technical annexes remain open before signature.
There is a third possibility that neither side has articulated publicly. The two sets of numbers may be measuring different things. The June 2026 allocations under the steel regulation are administrative allocations for a defined quota period and are subject to revision as the Commission manages the regime. The agreement’s allocations are treaty commitments, guaranteed for the duration of the agreement and not subject to unilateral reduction. A smaller guaranteed floor may be worth more than a larger discretionary allocation if the discretionary allocation can be cut in the next review, and the European steel regulation has already demonstrated that it can be cut by 47 percent in a single step.
Indian industry’s note, as reported, frames the comparison in terms of total entitlement rather than in terms of security of entitlement. Whether that framing survives contact with the Commission’s explanation will determine how far the issue runs.
What it means for Indian exporters
For Indian mills and their customers, several practical consequences follow immediately, regardless of how the dispute is resolved.
Planning assumptions need revision. Export programmes to Europe built on the expectation that the agreement would add preferential volume on top of existing access should be re-based on the published allocations. The difference is roughly 300,000 tons a year across all categories, which is a meaningful share of Indian flat steel exports to Europe.
Product mix matters more than aggregate volume. The shortfalls are proportionally largest in the categories where Indian mills have been most competitive, hot-rolled and cold-rolled flat products and coated sheet. An exporter whose European business is concentrated in coated products faces a tighter squeeze than the aggregate figure suggests.
Timing within the quota period becomes decisive. Under a tariff-rate quota system, volume is allocated on a first come, first served basis within each period, and once a quota is exhausted, further imports pay the out-of-quota duty. With a 50 percent out-of-quota rate under the European regime, exhausting a quota is effectively equivalent to market closure for the remainder of the period. European quota utilisation data in early September showed usage reaching 99 percent for some product categories, which is the practical reality behind the abstract numbers.
Alternative markets need development, and that is harder than it was. The same September weeks that produced this dispute also produced an Indonesian anti-dumping investigation into Chinese galvanised steel, an Australian probe into galvanised imports from three countries, a Malaysian case against Indonesian stainless steel and a European expiry review covering cold-rolled stainless from India and Indonesia at rates of 10.0 and 35.3 percent for Indian material. The global market for redirected steel is contracting on every axis at once.
What it means for European buyers
European steel consumers have an interest in this dispute that is the mirror image of the Indian producers’ interest.
Buyers of flat steel in Europe have faced a contracting supply pool since July 1. A 47 percent reduction in duty-free quota volume, a 50 percent out-of-quota duty and a melt and pour origin requirement together constitute the tightest import regime the European market has operated. European downstream associations warned Brussels in early September about a widening competitiveness gap for fabricators who buy protected steel and sell into markets open to finished imports made from unprotected steel.
In that context, the preferential Indian quota is not merely a concession to India. It is a supply channel for European buyers, and a smaller channel means less competitive pressure on European mill pricing and fewer alternatives during periods of quota exhaustion. Buyers who assumed the agreement would ease the squeeze should recalibrate.
The melt and pour rules add a further layer. Since the Commission’s implementing act of August 31, 2026 specifying the evidence importers must provide to prove the country of melt and pour, preferential access under any agreement must be documented back to the steelmaking step. Indian mills that pour their own steel are well placed to comply. Traders handling material of mixed provenance are not.
The broader pattern
This dispute illustrates a tension that is becoming general in trade policy.
Preferential trade agreements have historically been negotiated on the assumption that the most-favoured-nation baseline is stable. A partner grants preferential access relative to a known tariff or a known quota, and the value of the preference is the margin between the two. When the baseline itself is being rewritten by emergency and safeguard instruments, as the European steel baseline has been rewritten twice in fifteen months, the value of a preference negotiated against an earlier baseline becomes uncertain.
India is experiencing this from the receiving end. It is also applying it from the other direction. Earlier this year, Indian officials signalled that they were considering withdrawing concessions under the India and United Kingdom agreement in response to British plans to impose a steel safeguard, on the grounds that a safeguard erodes the preferential access the agreement was supposed to guarantee. The logic runs both ways and every trading partner now has an incentive to apply it.
The systemic implication is that the guaranteed quota, rather than the tariff rate, is becoming the operative currency of market access in metals trade. Tariff elimination is worth little if quantitative limits bind first. Negotiators on both sides of future agreements will need to write quota clauses that specify how the preferential allocation interacts with whatever safeguard or emergency regime the importing party maintains, including what happens when that regime is tightened mid-term.
How tariff-rate quotas actually behave
Much of the confusion in this dispute stems from the fact that a tariff-rate quota is a far more complicated instrument than a tariff, and its practical value depends on details that rarely appear in headline figures.
Four parameters determine what a quota is worth. The first is volume, which is the number that has generated the current argument. The second is the administration method, meaning whether volume is allocated first come first served at the point of customs clearance, distributed through licences issued in advance, or apportioned among historical shippers. The third is periodicity, meaning whether the annual volume is released in a single tranche or divided into quarterly tranches, and whether unused volume in one tranche rolls into the next. The fourth is the out-of-quota rate, which sets the cost of shipping once the quota closes.
The European regime under the 2026 steel regulation combines quarterly release with first come first served allocation and a 50 percent out-of-quota duty. That combination produces a characteristic pattern. Exporters and their customers front-load shipments into the opening days of each quarter to secure quota space, port congestion follows, and the quota for popular categories exhausts well before the quarter ends. Buyers who need material in the third month of a quarter face either the out-of-quota duty or a wait.
Under that dynamic, a guaranteed country-specific allocation is worth considerably more per tonne than a share of a general pool, because it removes the race. An Indian exporter with a dedicated allocation can plan shipments across the period rather than competing for space in the first week. That is the argument European negotiators will make in defence of the agreement’s numbers, and it has real force.
It is not, however, a complete answer. A guaranteed allocation that is smaller than a contested allocation is only better if the contested allocation could not in practice be used. Where Indian exporters have been successfully capturing their share of the general pool, converting that into a smaller guaranteed number is a straightforward reduction. Where they have been squeezed out by faster shippers, the guarantee is worth the premium.
Resolving that question requires utilisation data at product level, which is why both governments will now be examining the same spreadsheets. If Indian exporters have been consistently filling their June 2026 allocations, the industry’s case for higher numbers is strong. If material shares of those allocations have gone unused, the Commission’s case for the agreement’s figures is strong.
There is a further wrinkle that neither side has yet raised publicly. Quota allocations under the steel regulation are reviewable. The agreement’s allocations, once ratified, are not reviewable unilaterally. An exporter facing an importing party that has already cut quota volumes by 47 percent in a single step may reasonably conclude that a legally guaranteed floor, even a lower one, is the more durable asset. That argument has not featured in the Indian industry’s submission as reported, and it is the strongest card the Commission holds.
What to watch
Three developments will determine whether this becomes a footnote or an obstacle.
The first is the Commission’s explanation of methodology. If Brussels can show that the agreement’s allocations are calculated on a different and defensible basis, and that the guarantee attached to them compensates for the lower headline volume, the dispute is manageable. If it cannot, Indian negotiators will have a case for an adjustment.
The second is the position taken by the Indian government. The trade ministry has received the industry’s submission. Whether it adopts the 29 to 35 percent demand as a negotiating position, seeks a technical clarification, or accepts the schedules as negotiated will become apparent as the Council process advances.
The third is the European quota data. Utilisation rates in the current and next quota periods will show whether Indian exporters are in fact constrained by the allocations or whether demand conditions mean the quotas go unfilled. If quotas are not being exhausted, the dispute is theoretical. If they are exhausted within weeks of opening, as some European categories have been, the 300,000 ton gap is a direct and measurable loss of trade.
For importers and exporters on both sides, the practical guidance is the same. Model the published allocations, not the headlines. Track utilisation weekly. And write contracts that specify who bears the cost when a quota closes.