India-UK Trade Pact Hits Steel Snag Just Before Rollout

The long-awaited India-UK trade deal has run into a fresh roadblock days before its planned launch. New steel import rules unveiled by Britain have thrown a wrench into the rollout of the Comprehensive Economic and Trade Agreement (CETA). Commerce Secretary Rajesh Agrawal confirmed on Friday that the two nations are racing to find a workaround so the pact can finally take effect.

Steel Rules Trigger Late-Stage Hiccup in CETA Rollout

The India-UK CETA, signed in July 2025, was widely expected to come into force in May 2026. That timeline has now slipped.

India’s free trade deal with Britain, initially expected to be implemented by May, has hit an expected hurdle over the UK’s new steel import curbs, India’s trade secretary Rajesh Agrawal said on Friday. “On the India-UK FTA we are very near to operationalising that. There are a few sticking points as you are aware,” Agrawal told reporters, adding that the steel measures were not factored in during negotiations.

The Commerce Secretary said both sides are now working on a “creative solution” to push the deal across the finish line at an early date. The new steel regulation was never part of the trade negotiations, which has caught Indian officials off guard.

Earlier this year, Commerce Minister Piyush Goyal had sounded fully confident that the pact would land in May. India-UK free trade agreement (FTA), signed in July last year, is likely to come into force in the next 30-45 days, Commerce and Industry Minister Piyush Goyal said. “The United Kingdom is also very pleased at the speed with which the India-UK Free Trade Agreement passed both Houses of Parliament… and we are also looking at a possible entry into force of the agreement over the next 30 to 45 days,” he told reporters.

What UK’s New Steel Measure Actually Says

Britain’s fresh policy is the heart of the problem. On 19 March 2026, the UK Government published its long-awaited Steel Strategy which includes a significant new steel trade measure, alongside a landmark package of state support for UK steel. The Steel Strategy aims to strengthen economic, energy and national security, while also promoting industries including clean energy, construction and defence.

The numbers are stark. Here is a quick snapshot of what changes from July 1, 2026:

The current steel safeguard regime will expire on 30 June 2026, with the new measure taking effect immediately on 1 July. The UK Government has confirmed a new steel trade measure that will take effect from 1 July 2026, replacing the current steel safeguard regime which expires at the end of June. The measure forms part of the Government’s wider Steel Strategy and is intended to address the impact of global overcapacity on the domestic steel sector.

Britain is also exploring relief for older contracts. A transitional arrangement is being looked at under which the new tariff would not apply to goods under contract agreed before 14 March 2026 and imported between 1 July and 30 September 2026. Details are being finalised to ensure it gives support from unexpected costs, while still protecting the UK market from excessive imports.

Why Indian Steel Exporters Are Worried

India sees this as protectionism creeping in through the back door. The new regime, set to take effect from July 1, will sharply reduce tariff-free quotas and impose steep duties on shipments beyond those limits, potentially impacting exporters. The curbs could dilute market access benefits for countries such as India, whose steel makers were expected to gain from tariff reductions under the agreement.

For Indian mills, the timing stings. CETA promised duty-free entry on most goods, including iron and steel products, only for this new measure to cap the upside.

The UK has been blunt about its reasons. The Steel Strategy is published at a moment of acute pressure on the UK’s domestic steelmaking industry. Crude steel production has declined by more than 50% over the past decade and global overcapacity has reduced the competitiveness of UK producers.

Key worries flagged by Indian exporters and industry watchers include:

• Shrinking duty-free quotas that could fill up within weeks of each quarter
• A doubled penalty tariff of 50% wiping out CETA price gains
• Sourcing rerouting needed for downstream UK clients
• Tight country caps limiting volume growth from India
• Risk of supply chain shocks during the transition window

India-UK CETA: The Big Picture

The trade pact is no small affair. Bilateral trade has already reached USD 56 billion, with a target to double this by 2030. Both governments have invested huge political capital in getting it done.

CETA provides an unprecedented duty-free access to 99 per cent of India’s exports to the UK, covering nearly 100% of the trade value. In return, India agreed to slash duties on Scotch whisky, gin, automobiles, and several premium British goods.

The deal also unlocks easier mobility for Indian professionals and a Double Contribution Convention that protects workers from paying social security in both countries.

UK officials are equally invested. The UK–India Comprehensive Economic and Trade Agreement (CETA) is the UK’s most economically significant bilateral free trade agreement since leaving the European Union. The Government estimates that, by 2040, the Agreement could increase UK GDP by £4.8 billion and raise bilateral trade with India by £25.5 billion, relative to a scenario without an agreement. It delivers the UK’s largest package of tariff reductions to date, with estimated duty savings for UK exporters of around £400 million at entry into force, rising to £900 million after ten years.

Both Sides Hunt for a Workable Fix

So what happens next? Talks are now focused on bridging the steel gap without reopening the full agreement. Negotiators want a side arrangement that protects Indian volumes while respecting Britain’s safeguard goals.

Industry chambers in Mumbai and London are pushing for clarity before the July deadline. Exporters say they need certainty on whether their shipments will fall inside or outside the new quota system. A late deal is still better than a derailed one.

The mood, despite the snag, remains hopeful on both sides of the table. Officials have stressed that the pact is “very near” to being operational. The UK steel safeguard must expire after 30 June 2026 and cannot be extended beyond that date. Prompted by the US reintroduction of tariffs on steel imports and the EU tightening its steel protections, the UK Government tightened steel import quotas.

For now, businesses in both countries are stuck watching the calendar. The next few weeks will decide whether CETA opens with a bang or with a quiet patch-up. For India’s textile makers, jewellers, seafood exporters, and yes, steel mills too, every day of delay is money left on the table. The story is far from over, and the world is watching how two of the planet’s biggest democracies turn a sudden hurdle into a smart fix. Share your thoughts in the comments below. Do you think India should hold firm or accept a compromise to get CETA rolling? Drop your views, tag your business friends, and keep the conversation alive.