India's steel exports to Europe face increased costs and reduced competitiveness due to the EU's Carbon Border Adjustment Mechanism (CBAM), which begins implementation in January 2026. The mechanism requires importers to pay a levy based on production emissions, potentially increasing export prices by 15-22%. Indian steel, largely produced via higher-emission blast furnaces, may see costs rise by $55-80 per tonne, forcing exporters to absorb some costs, thus compressing margins and potentially impacting market share against lower-emission competitors.