India’s finished steel exports are expected to decline 25-30 per cent year-on-year in FY27 as tighter European Union (EU) safeguard measures reduce the country’s duty-free access to its largest overseas market, according to a report by Crisil Intelligence.

The report said the decline in exports could result in India losing its status as a net exporter of finished steel this financial year, after exporting around 6.6 million tonnes (MT) of finished steel in the previous financial year. The EU was India’s largest export destination, with key markets including Italy, Belgium, Spain, Vietnam and the United Arab Emirates.

The expected decline follows the EU’s revised steel safeguard regime, which came into effect on July 1. Under the new framework, the bloc has substantially reduced volume-based import quotas and tightened market access for exporters. Although India’s overall quota allocation has been lowered significantly, the introduction of new free trade agreement (FTA)-linked quota categories could partly offset the impact, the report said.

According to Crisil, India’s overall product-specific quota has been reduced by around 30 per cent, from about 2.8 MT under the earlier framework to nearly 1.9 MT under the revised regime. However, Indian exporters may be able to compete for around 1.2 MT under the newly created FTA country-specific quota (FTA-CSQ) pool and another 0.4 MT under the FTA-others category, taking the overall export opportunity to around 3.5 MT. These additional quota pools are competitive and do not represent guaranteed allocations for India.

The report said that despite these new channels, lower quota allocations and intense competition in global markets, particularly amid weak steel prices outside the EU, are expected to weigh on India’s exports this financial year. As export realisations come under pressure, domestic steelmakers are likely to focus more on the domestic market.

Europe remains a strategically important market for Indian steel exporters. In calendar year 2025, the EU imported around 29.7 MT of steel, of which approximately 2.4 MT came from India, giving the country an 8 per cent share. Nearly 40 per cent of India’s finished steel exports during the year were destined for the EU, making the region one of its most significant overseas markets.

The report noted that the EU has tightened its protection measures against a backdrop of global steel overcapacity and rising import penetration. Effective July 1, the bloc reduced annual duty-free import quotas by 47 per cent to 18.3 MT and doubled the out-of-quota tariff from 25 per cent to 50 per cent.

The impact of the revised regime is expected to vary across product categories. Stainless cold-rolled sheets and strips face the steepest reduction in quota allocation, at 69 per cent, followed by non-alloy and other alloy cold-rolled sheets, which face a 59 per cent decline.

Crisil cautioned that weaker exports to Europe could increase steel availability in the domestic market, putting pressure on prices and profitability. It noted that a similar trend was seen in FY23, when exports fell sharply following the imposition of export duties and weaker global demand, leading to a decline in average domestic hot-rolled coil prices.

While domestic steel prices are expected to remain under pressure amid moderate demand growth, India’s existing safeguard duty on steel imports is expected to continue providing some support, the report said.