India will be able to export up to 1.64 million ​metric tons of steel a year to ​the European Union under a free trade agreement, but ‌exporters will still face carbon-related costs, according to the legal text of the pact.

The agreement provides India with an additional preferential quota of 694,853 tons of steel, on top of an existing 946,616 ton WTO quota.

The combined quota is equivalent to about 68.4% of India's 2.4 million tons of steel exports to the EU in 2025, up from ‌39.4% under the existing quota.

Steel shipments above the quota will be subject to the EU's 50% tariff, according to a Global Trade Research Initiative (GTRI) analysis of the legal text of the agreement, which was released on Friday and could still be revised.

The preferential ​quota does not exempt Indian steel from the EU's Carbon Border Adjustment Mechanism, ‌which applies to all steel imports, and which GTRI estimates could average around 35% of the ​value ‌once fully phased in.

Most of India's quota is allocated ‌to flat-steel products, with hot-rolled sheets and strips receiving the largest allocation of 509,605 tons.

The additional ‌quota will ​become available once ​the India-EU FTA enters into force, expected by year end, and will remain subject to product ‌coverage, rules ​of origin and quota availability.