India and the United Kingdom are actively working to resolve outstanding issues that have delayed the implementation of their free trade agreement, with both sides holding discussions to operationalise the pact signed in July last year, according to a PTI report.
Discussions Underway
Commerce Secretary Rajesh Agrawal stated that an Indian team is already in London to advance the discussions and ensure that the agreement can be operationalised. He noted that certain issues have emerged after the deal was signed and are currently under resolution.
Agrawal revealed that UK Secretary of State for Business and Trade Peter Kyle had discussed these matters with Commerce and Industry Minister Piyush Goyal earlier this month. He expressed optimism, saying, "So, we are very close on all these issues, and we hope there will be a resolution."
Key Sticking Points
The primary issues include the UK's steel safeguard measures and its proposed Carbon Border Adjustment Mechanism (CBAM). Both have become key sticking points in the implementation of the Comprehensive Economic and Trade Agreement (CETA), which was signed on July 24, 2025.
Starting July 1, 2026, the UK will restrict tariff-free steel imports by reducing overall quota volumes by 60% compared with the existing steel safeguard regime. Imports exceeding the quota will attract a 50% tariff. This measure applies to steel products that can also be manufactured in the UK. Britain had previously imposed safeguard measures through import quotas, but the new framework reduces those quotas further.
Carbon Border Adjustment Mechanism
In December 2023, the UK also decided to implement its Carbon Border Adjustment Mechanism from 2027. According to economic think tank GTRI, India's exports worth $775 million to the UK could be affected by Britain's decision to impose a carbon tax on products such as iron and steel, aluminium, fertiliser, and cement from 2027.
After the European Union, the UK will become the second major economy to implement a CBAM-type mechanism. Britain refers to it as an import carbon pricing mechanism and plans to initially cover sectors including iron, steel, aluminium, fertiliser, hydrogen, ceramics, glass, and cement. The tax could range between 14% and 24% of the import value once free allowances under the Emission Trading System (ETS) are fully phased out. India's exports of iron and steel and related products to the UK stood at $893.4 million in 2025-26.
EU Sanctions on Russian Entities
Regarding the European Commission's proposed sanctions package against Russia, which includes certain Indian entities, Agrawal said India is in discussions with the EU. He stated, "We are engaged, and we are looking at what best can be done. But as you recall, India normally recognises the UN sanctions." He added that Indian companies had faced sanctions in the past for different reasons. According to reports, certain Indian firms are among 50 companies that could face fresh EU export-control restrictions under the bloc's proposed 21st sanctions package against Russia.
