India's steel exports to Europe set to drop

NEW DELHI, Dec 5 (Reuters): India's steel exports to Europe are expected to fall once the European Union's carbon tax takes effect next month, prompting mills to seek alternative buyers in Africa and the Middle East, industry executives and analysts said.

Imports of steel into the European Economic Area will face a carbon tax under the EU's Carbon Border Adjustment Mechanism (CBAM) starting on January 1. The decarbonisation-oriented levy will also apply to cement, electricity, fertilisers and other products.

Mills in India, the world's second-largest crude steel producer after China, ship roughly two-thirds of their exports to Europe.

Experts say Indian mills will need to cut their carbon emissions.

"We recognise that we have to do environment-friendly production and companies are gearing up to comply, but they are also looking at alternative markets too," Aruna Sharma, India's former steel secretary, told Reuters.