Mumbai, Dec. 5 -- India's steel exports to Europe are expected to fall once the European Union's carbon tax takes effect next month, prompting mills to seek alternative buyers in Africa and the Middle East.

Imports of steel into the European Economic Area will face a carbon tax under the EU's Carbon Border Adjustment Mechanism (CBAM) starting on January 1. The decarbonisation-oriented levy will also apply to cement, electricity, fertilisers and other products.

Mills in India, the world's second-largest crude steel producer after China, ship roughly two-thirds of their exports to Europe. Most of India's steel is produced in blast furnaces, which generate higher emissions. further expansion of blast furnace capacity is a concern. Addition...