India and the UK are 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, PTI reported.
Commerce Secretary Rajesh Agrawal said an Indian team is already in London to take forward the discussions and ensure that "we are able to operationalise" the agreement.
There are certain issues which have come up after the deal has been signed. Those issues are under resolution, he told reporters.
Agrawal said UK Secretary of State for Business and Trade Peter Kyle had discussed these matters with Commerce and Industry Minister Piyush Goyal earlier this month.
"So, we are very close on all these issues, and we hope there will be a resolution," he said.
Outstanding Issues
The issues include the UK's steel safeguard measures and its proposed Carbon Border Adjustment Mechanism (CBAM), both of which have emerged as key sticking points in the implementation of the Comprehensive Economic and Trade Agreement (CETA) signed on July 24, 2025.
Steel Safeguard Measures
From 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 above the quota will attract a 50% tariff. The measure will apply to steel products that can also be manufactured in the UK.
Britain had earlier 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.
| Measure | Effective Date | Details |
|---|---|---|
| UK Steel Safeguard quota cut | July 1, 2026 | 60% reduction in tariff-free quota; 50% tariff above quota |
| UK Carbon Border Adjustment Mechanism | 2027 | 14%-24% import tax on steel, aluminium, fertiliser, cement, etc. |
| CETA signing | July 24, 2025 | Comprehensive Economic and Trade Agreement |
India's exports of iron and steel and related products to the UK stood at $893.4 million in 2025-26.
EU Sanctions on Russia
On the European Commission's proposed sanctions package against Russia, which includes certain Indian entities, Agrawal said India is in discussions with the EU.
"We are engaged, and we are looking at what best can be done. But as you recall, India normally recognises the UN sanctions," he said.
He added that Indian companies had faced sanctions in the past as well 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.
For importers and exporters, the resolution of these issues is critical. The steel safeguard quota cut will directly impact Indian steel shipments to the UK, while the CBAM will add a compliance cost on carbon-intensive products. The ongoing negotiations indicate that both sides are committed to operationalising the pact, but the timeline remains uncertain.
Sources:
