Turkey–EU Customs Union Must Be Updated: What Does the EU–India Agreement Mean for Turkey?
2026 is shaping up to be a challenging year for the global steel sector and Turkey's steel industry. Rising protectionism, CBAM costs and trade agreements the EU has signed with third countries are reshaping the competitive landscape for Turkish steel.
In addition to this picture, the failure to update the Turkey–EU Customs Union Agreement is becoming an increasingly serious problem for Turkey. While the European Union's signing of the Mercosur Agreement after 25 years of negotiations is seen as a significant step for the EU, a potential new trade deal with India is said to pose a serious threat to Turkey. For this reason, updating the Turkey–EU Customs Union has emerged as a need that can no longer be deferred.
The Impact of the EU–India Agreement on Turkey's Steel Sector
The trade agreement signed between the European Union and India is expected to have adverse long-term effects, particularly on Turkey's steel sector. India's increased exports to the EU in sectors such as automotive, machinery, chemicals and textiles will also provide an indirect advantage in steel products.
The main risks of the EU–India trade agreement for Turkey's steel sector are as follows:
- Increased competition
- India's ability to offer products to the EU market at lower tariffs
- A greater likelihood of the EU preferring India over Turkey for steel procurement
- Growth in India's production capacity and market share
- Increased pressure on Turkey's steel exports to the EU
If India is able to offer steel products compliant with EU carbon regulations at low carbon costs, it could gain a significant competitive advantage over Turkey. Should CBAM (Carbon Border Adjustment Mechanism) costs come into effect for Turkish-origin products, Indian products could become more attractive in the EU market. This development could seriously challenge Turkey's export strategies.
Will India Be Granted an Exception in Steel?
India wants to benefit from the European Union's duty-free import quotas for steel products. A decision on this matter is expected by 30 June. The European Commission is said to be planning to exempt India from the tariffs it imposed on steel products last year.
Under the current plan, there is talk of exempting 1.6 million tonnes of steel imported annually from India from customs duties. If such a decision is implemented, competitive conditions for Turkey's steel sector are expected to become even more challenging.