India and the United Kingdom on Tuesday held high-level discussions to address the critical issues hindering the implementation of the Comprehensive Economic and Trade Agreement (CETA), which was signed in July last year. The meeting between Commerce Secretary Rajesh Agarwal and UK Permanent Secretary Amanda Brooks focused on reviewing progress under the trade pact and identifying pathways to overcome the sticking points.
Key Issues Delaying Implementation
Among the major obstacles are Britain's steel safeguard measures and its proposed Carbon Border Adjustment Mechanism (CBAM). According to government sources, India may consider rebalancing certain duty concessions offered under the pact—including on products like Scotch whisky—if these concerns remain unresolved. From July 1, 2026, the UK plans to limit tariff-free steel imports by reducing overall quota volumes by 60 percent compared to the existing safeguard mechanism. Imports exceeding the quota will face a 50 percent tariff. The measure targets steel products that can also be manufactured domestically in the UK.
Additionally, the UK government announced in December 2023 that it would implement its CBAM from 2027, imposing a carbon tax on imports such as iron and steel, aluminium, fertiliser, and cement. This tax could range between 14 and 24 percent of the import value after the full phase-out of free allowances under the Emission Trading System (ETS).
Impact on Indian Exports
According to the economic think tank GTRI, India's exports worth USD 775 million to the UK could be affected by the carbon tax. India's exports of iron and steel and related products to the UK stood at USD 893.4 million in 2025-26, forming a significant portion of total merchandise exports to Britain, which amounted to USD 13.4 billion.
Potential Rebalancing of Concessions
Under the trade pact, India had agreed to reduce duties on UK whisky and gin from 150 percent to 75 percent initially, and further to 40 percent in the tenth year. Popular Scotch whisky brands like Johnnie Walker, Chivas Regal, and The Glenlivet are among the best-selling in India. If the UK's steel and carbon measures are not addressed, India may rebalance these concessions.
Bilateral Talks at Ministerial Level
Separately, Commerce and Industry Minister Piyush Goyal held talks with UK Secretary of State for Business and Trade Peter Kyle to strengthen bilateral economic ties. Goyal described the discussions as productive, focusing on charting the next phase of India-UK economic engagement and advancing shared business priorities.
Both sides reaffirmed their commitment to regular engagement for the effective implementation of the trade agreement. The UK's CBAM, similar to the European Union's mechanism, will be the second such system implemented by a major economy, covering sectors like iron, steel, aluminium, fertiliser, hydrogen, ceramics, glass, and cement.
