India and the UK have been able to resolve one of the three key issues currently delaying the operationalisation of their trade pact, according to officials familiar with the matter. While details of the specific issue have not been disclosed, discussions are largely centred on trade-related concerns such as restrictions on steel imports and the Carbon Border Adjustment Mechanism (CBAM), which emerged after the agreement was signed.
Sources in the Commerce Ministry said all outstanding issues, including steel import restrictions and CBAM-related concerns, will be addressed in the final agreement to ensure better market access for Indian exporters in the UK.
From July 1, 2026, the UK will impose stricter steel import controls, including a 60% reduction in tariff-free quota volumes. Imports exceeding these limits will attract a steep 50% tariff. Indian steel exporters have expressed concerns that these measures, which affect 88 steel tariff lines, could undermine the market access benefits negotiated under the Comprehensive Economic and Trade Agreement (CETA) framework.
"Talks are ongoing and progress has been good. We have resolved one of the three issues. On the second and third issues, they have given us some proposals and we have raised certain queries. Both teams are working on them," an official said on Monday.
The official added that all the sticking points would be resolved before the final implementation of the agreement.
The UK's decision to introduce the CBAM from 2027 has also prompted India to seek greater clarity on its long-term impact on emissions-intensive exports such as steel, aluminium and cement.
India and the UK signed the Free Trade Agreement (FTA) last year with the objective of bringing it into force this year. However, the UK's subsequent decision to introduce steel import restrictions and the CBAM has created fresh hurdles in the implementation process.
