India is pushing for a steel quota in the UK market worth nearly $900 million under the bilateral free trade agreement (FTA) signed in July 2025 in a bid to resolve the ongoing row over steel curbs announced by the UK, The Indian Express has learned.

This has delayed implementation of the trade deal even though negotiations were concluded a year ago.

The move comes after the Indian steel industry flagged that the quotas announced by the UK would end up limiting even the current levels of Indian steel and products exports despite the FTA, and asked the government to at least ensure a quota equivalent to the three-year average of India’s steel and steel products exports to the UK.

Government officials have said that India will move to curb Scotch whisky as a retaliatory measure if Indian interests are hurt.

“Our quota needs to be at least the average of the last three years’ exports. The quota announced by the UK, which is set to come into effect from July 1, is far below that level, and the steel industry will end up suffering despite the FTA. The industry would end up taking a large hit in at least 6 categories where we have a significant export interest. Our exports are far higher than their proposed quota,” a source told The Indian Express.

Industrial exports to the UK are facing two major regulatory impediments, even after concluding the trade negotiations. Officials said the immediate worry is the steel quota because it comes into effect on July 1. It will be followed by the UK’s Carbon Border Adjustment Mechanism (CBAM) set to come into effect on January 1, 2027.

A query emailed to the Ministry did not elicit a response.

Under the CBAM regulation, the UK will place a carbon price on some of the most emissions-intensive industrial goods imported to the UK – covering the aluminium, cement, fertiliser, hydrogen, and iron & steel sectors – which are considered at risk of carbon leakage. But the scope will increase going forward.

“The sectoral and product-level scope of the CBAM will be kept under review beyond 2027 as new evidence comes to light to reflect changes to carbon leakage risk, as well as methodological and technological advances,” a UK government statement read.

India’s exports of iron and steel and their products to the UK stood at $893.4 million in 2025-26, accounting for a significant share of $13.4 billion in total merchandise exports to the UK.

Maintaining that overcapacity was hurting the country’s steel manufacturing industry, the UK in March lowered the tariff-free quota on imported steel and doubled the tariff on imports exceeding that ‌quota from 25% to 50%.

Trade experts said such measures are typically announced to curb trade diversion from other countries, particularly the EU and the US. Both the EU and the US have also raised tariffs on steel outside quotas to 50%. However, experts pointed out that the UK has limited steel manufacturing capacity

According to news agency Reuters, the UK steel sector only accounted for 0.1% of UK economic output in 2024 but supported 37,000 jobs, many in the heartlands of the governing Labour Party, which grew from a trade union movement deeply rooted in Britain’s industrial heritage.

Fresh political challenges have been brewing for Prime Minister Keir Starmer after his Labour Party suffered steep losses in local elections across the country.