Mumbai, Jan. 27 -- The free trade agreement (FTA) between India and the European Union (EU) promises preferential treatment for Indian industries under the bloc's carbon tax mechanism, potentially opening up export opportunities for domestic steelmakers, which remain largely focused on the local market.

At the same time, experts said the removal of import duties on European steel will have little impact on India's steel industry, as that remains costlier than domestically produced product due to the continent's higher labour and power costs and stricter emission standards.

Europe is planning to levy a surcharge on imports in highly polluting industries like steel, aluminium, cement, and fertilizers under its Carbon Border Adjustment Mec...