New Delhi [India], July 15 (ANI): In a clear signal that domestic environmental regulations will be handled independently of bilateral trade commitments, the United Kingdom has firmly insulated its free trade talks with India from controversial green levies.

Speaking with ANI, the UK's Trade Commissioner for South Asia and former chief negotiator for the UK-India FTA, Harjinder Kang, addressed the persistent concerns over whether the upcoming UK Carbon Border Adjustment Mechanism (CBAM) will hurt Indian industrial competitiveness and escalate costs for domestic steel exporters. He clarified that the policy has been kept completely off the negotiating table.

'We made it clear from day one that CBAM was never part of the FTA. It was not discussed as part of the agreement,' Kang stated, signalling a decoupled approach to environmental policy and tariff reductions.

The UK's CBAM, which is designed to place a tariff on carbon-intensive imports like steel, aluminum, and cement to level the playing field for domestic manufacturers, has been a major point of anxiety for Indian trade ministries.

However, Kang indicated that any friction arising from the green tax would be dealt with outside the architecture of the current trade pact, concluding, 'We will address it if and when it comes...'

Kang acknowledged the concerns that the mechanism could raise export costs for Indian manufacturers, particularly if new carbon-related standards come into force after the trade pact is implemented.

'The worry is that when it does come, it might increase costs for exports. So they will get the benefit of the agreement right now. But next year, if the standards change, they may have to increase their export price,' he said.

Reiterating that CBAM was outside the scope of the FTA negotiations, Kang underlined that the issue would be addressed separately when required.

'We've left it at that -- we'll address that as and when it happens. Right now, it was never part of the FTA and we don't want to make it part of the FTA at this point in time,' Kang added.

The Carbon Border Adjustment Mechanism will commence on January 1, 2027 to ensure highly traded, carbon-intensive products from jurisdictions outside the UK face a comparable carbon price to that paid by UK manufacturers so that the UK's decarbonisation efforts lead to a 'true reduction' in global emissions rather than displacing carbon emissions overseas.

It will place a carbon price on the emissions of specified goods in sectors such as aluminium, cement, fertiliser, hydrogen, iron and steel, as per the official website of the UK Government on the CBAM policy.

Its scope will apply to specified goods imported into the UK on or after January 1, 2027, across the whole of the UK, including Northern Ireland.

'Goods which enter the UK from the Crown Dependencies, including the Isle of Man, Overseas Territories and UK Continental Shelf, will be subject to CBAM,' the official website of the UK government on the CBAM policy summary added.

Kang also clarified that UK's safeguard measures on steel imports are designed to shield its domestic industry from unfairly priced overseas shipments and are not targeted at India and will allay concerns among Indian steel exporters over the newly implemented trade pact.

Kang said the UK's steel safeguards were introduced to protect domestic manufacturers from overseas dumping, a challenge faced by several countries, and should not be viewed as a measure directed against Indian steel producers.

Addressing concerns over import restrictions and how steel quotas under the agreement will be structured, the Chief Negotiator emphasised that existing UK trade defence measures were not aimed at targeting Indian trade.

'...The steel safeguards that the UK has put in place are essentially designed to protect the industry from overseas dumping...It has nothing to do with India. It is not an anti-India measure in any shape or form,' Kang asserted.

He further minimised the potential fallout on bilateral trade volumes, explaining that the restrictions only touch a fraction of current exports. 'By and large, the majority of steel exported from India to the UK is unaffected. It is actually only a small proportion, in the double digits, around 15-20% of the type of steel India exports that falls within the affected category. This is something we discussed with the Indian government to find a way to address the issue. We reached an amicable solution, and everything is good...' Kang said.

The clarification comes amid industry concerns over the treatment of steel exports under the India-UK Free Trade Agreement, which came into force on Wednesday. While the agreement significantly lowers tariffs across thousands of product lines, steel exports remain subject to quota-based safeguard measures in certain categories.

The India-UK Free Trade Agreement (FTA), officially known as the Comprehensive Economic and Trade Agreement (CETA), is a landmark deal that aims to boost bilateral trade between the two nations by Pound 25.5 billion annually.

Signed in July 2025 during Prime Minister Narendra Modi's visit to the UK, this agreement marks a significant milestone in the economic partnership between the world's fifth- and sixth-largest economies.

Indian businesses will gain greater access to the UK market, with the UK offering 99.1 per cent of tariff lines with 100 per cent trade value, mostly at zero duty immediately upon the agreement's enforcement.

The FTA is expected to create thousands of jobs in both countries, particularly in sectors like textiles, leather, footwear, sports goods, and engineering.

According to the Ministry of Commerce and Industry, this agreement with the United Kingdom is expected to significantly improve market access for Indian exports, with 90.2 per cent of India's exports to the UK becoming duty-free.

India currently enjoys a trade surplus with the UK in both merchandise and services. India's services exports to the UK stood at USD 21.6 billion in 2024, while UK services exports to India were valued at USD 13.7 billion. Merchandise exports from India to the UK stood at USD 13.7 billion in 2025, compared with imports of USD 9.47 billion.

The trade pact aims to expand market access, reduce tariffs, and double bilateral trade by 2030. (ANI)