EU-India FTA Could Improve Indian Aluminium Access, but CBAM Still Limits the Upside

Hindalco Industries

The EU-India FTA could improve the position of Indian aluminium suppliers in Europe. The deal would reduce EU tariffs on Indian base metal imports to zero from 10pc. That change could give Indian aluminium exports a stronger commercial opening. As a result, the EU-India FTA may improve competitiveness for producers such as Hindalco and Vedanta.

The tariff change matters because Indian suppliers have faced a clear disadvantage in Europe. Duty-free suppliers such as Norway, Iceland, and Canada already held an edge. Removing the tariff could narrow that gap. Therefore, Indian aluminium suppliers may enter the EU market on more equal terms.

However, the agreement does not remove every barrier. EU CBAM will still apply to imported goods, even after the tariff cut. That means carbon costs will remain a major factor in future trade economics. Consequently, the EU-India FTA improves access, but does not create a fully open market.

Indian Aluminium Exports Could Gain on Tariffs but Still Face Carbon Pressure

Indian aluminium exports could benefit immediately from lower tariff friction. Price-sensitive buyers in Europe may find Indian material more attractive under a zero-duty regime. That could support better trade flows from India to the EU. Meanwhile, producers are still waiting for final clarity on aluminium in the completed legal text.

CBAM remains the deeper long-term issue. The European Commission has already confirmed that the FTA offers no exemption from the carbon border measure. Importers will still face carbon-related obligations under EU climate policy. Therefore, Indian aluminium suppliers must think beyond tariffs and prepare for emissions competitiveness.

This is why industry optimism remains cautious rather than aggressive. Lower tariffs help, but they do not neutralize non-tariff costs. A trader in the article described CBAM as a continuing trade barrier. As a result, the full commercial benefit of the EU-India FTA may prove smaller than the headline suggests.

EU-India FTA Arrives as Indian Aluminium Exports to Europe Have Already Declined

Indian aluminium exports to the EU have already weakened in recent years. Rising domestic demand in India has reduced export availability. Lower export incentives have also weighed on overseas shipments. Therefore, the industry is entering this trade opportunity from a lower export base.

The recent numbers show that decline clearly. India’s primary aluminium exports to the EU fell sharply in 2024 from the previous year. Shipments in January to November 2025 also remained subdued. Consequently, the EU-India FTA may help stabilise exports first before driving a major surge.

The real opportunity will depend on how Indian producers balance three pressures. They must manage domestic demand, EU carbon costs, and international price competition. Tariff relief helps with one of those problems. However, it does not solve the other two. Therefore, Indian aluminium suppliers may gain an edge, but only within tighter structural limits.

The Metalnomist Commentary

This deal improves trade access, but it does not remove the real future test. European aluminium trade will increasingly depend on carbon performance as much as tariff policy. For Indian suppliers, the EU-India FTA is helpful, but CBAM will still decide who wins long term.

EU-India FTA and CBAM Remain on Separate Tracks

EU-India, FTA

The EU-India FTA and CBAM remain on separate tracks. The European Commission confirmed that the trade deal gives India no exemption from the carbon border measure. India will not receive more favourable treatment than other countries. As a result, the EU-India FTA and CBAM will continue to shape trade under different rules.

The trade agreement still marks a major commercial breakthrough. The two sides concluded talks on tariff cuts or eliminations covering most EU goods exports to India. However, Brussels kept its climate border policy fully intact. Therefore, the EU-India FTA and CBAM now define both opportunity and constraint for industrial trade.

CBAM Stays Firm Even as the Trade Deal Expands

CBAM remained one of the toughest issues in the negotiations. EU officials said India first took a very hard line on the carbon border measure. However, the final outcome did not alter the EU’s legal obligations. That means exporters to Europe must still prepare for carbon-related compliance costs.

The agreement instead opens room for technical dialogue. EU officials said both sides can now discuss CBAM through a more structured channel. They also agreed to deepen cooperation on climate change and decarbonisation. Meanwhile, the EU is considering support for India’s greenhouse gas mitigation efforts.

This approach shows the EU’s broader trade logic. Brussels wants market access and climate discipline at the same time. It will cooperate on decarbonisation, but it will not dilute core climate tools. Consequently, EU trade policy now links commercial openness with tougher carbon accountability.

Industrial Trade Gains, but Carbon Compliance Still Matters

The industrial impact will extend beyond tariffs alone. Steel, cars, and carbon-intensive products remain highly sensitive in the EU-India relationship. Even with lower tariffs, exporters still face the strategic challenge of embedded emissions. Therefore, carbon performance will matter almost as much as price competitiveness.

The agreement also leaves some areas outside the deal. EU officials said there is no dedicated chapter on raw materials or energy. That omission matters for supply chain planning in metals and industrial manufacturing. It suggests the current deal focuses more on trade access than resource integration.

The entry into force process will also take time. Legal revision, translation, publication, and political consent still lie ahead. That means businesses should not expect immediate full implementation. Instead, companies should prepare for a phased trade opening alongside unchanged carbon obligations.

The Metalnomist Commentary

This deal confirms that the EU will not trade away CBAM for easier market access. That is an important signal for metals, chemicals, and other carbon-intensive sectors. The real lesson is clear: future trade competitiveness will depend on both tariff access and decarbonisation readiness.

Yahua LGES Morocco Lithium Refinery: $612mn push to scale EV materials

LGES

Yahua and LGES advanced the Yahua LGES Morocco lithium refinery to secure battery-grade supply. The partners will invest $612mn in phase one. As a result, the Yahua LGES Morocco lithium refinery targets 90,000 t/yr of lithium salts at nameplate. The project underscores how the Yahua LGES Morocco lithium refinery can regionalize cathode supply chains.

Phase-one scope and capacity

The companies will build 30,000 t/yr in the first phase. Ultimately, the refinery will reach 90,000 t/yr of lithium salts. However, they did not disclose construction or launch dates. Yahua already agreed in 2023 to supply LG Chem 30,000t of lithium hydroxide over 2023–26. Therefore, the project complements existing offtake frameworks.

Why Morocco for lithium refining

Morocco offers FTA access to the US and strong industrial logistics. Meanwhile, abundant phosphate resources support LFP battery ecosystems. Chinese peers CNGR, BTR, and Huayou are also investing there. The country aims to produce 1mn vehicles in 2025, including 107,000 EVs. Consequently, local demand and export channels can anchor long-term utilization.

Morocco continues to attract upstream-to-midstream capital. As a result, LGES strengthens diversification beyond China while keeping cost discipline. The refinery also aligns with OEM sourcing strategies under evolving trade rules. Battery makers increasingly localize key steps to manage tariff and compliance risks.

The Metalnomist Commentary

The Morocco siting checks three boxes: FTA optionality, phosphate adjacency, and maturing auto clusters. Watch for feedstock strategy and conversion mix between carbonate and hydroxide. Clear timelines and ESG disclosures will determine bankability and pace.

India strengthens trade ties with Russia and China at SCO

India, SCO

India strengthens trade ties with Russia and China at SCO. The India strengthens trade ties with Russia and China agenda dominated Prime Minister Modi’s meetings in Tianjin. As a result, the India strengthens trade ties with Russia and China narrative now anchors India’s near-term trade posture amid US tariff headwinds.

SCO diplomacy and tariff backdrop

India deepened diplomatic outreach with Russia and China at the SCO. Modi and Putin discussed fertilizer, space, security, culture, and broader trade. However, US tariffs of 50pc on Indian goods complicate the backdrop. Meanwhile, Washington says talks continue despite stalled negotiations. A Delhi think-tank projects India’s US exports dropping to $49.6bn by FY2026 from $86.5bn. Therefore, India is reinforcing alternative corridors and market access.

Energy ties and trade outlook

Energy remains the spine of India-Russia trade. India imported 1.78mn b/d of Russian crude in January–August. Reliance led with over 600,000 b/d, supported by a term deal for up to 500,000 b/d of Urals. However, state refiners trimmed purchases as Urals discounts narrowed. Indian buyers briefly paused in late July after new EU sanctions and US tariff risks, then resumed. Meanwhile, ministers aim for $100bn in India-Russia trade by 2030 and a renewed EAEU FTA push.

The Metalnomist Commentary

India is hedging tariff risk with eastward diplomacy while protecting energy security through Urals flows. Watch the tariff trajectory, SCO follow-through, and refinery margins as discounts tighten; these will shape crude slates and bilateral trade math.