NEW DELHI, Feb 17 (Reuters) - India is seeking new markets for steel exports in the Middle East and Asia to offset the impact of the European Union's carbon tax, which came into effect in January, a government source said.

India, the world's second-largest producer of crude steel, sends about two-thirds of its steel exports to Europe, where flows have come under pressure following the European Union's carbon limit adjustment mechanism.

Last week, senior steel industry official Sandeep Poundrick said the government would have to take action to support exports affected by the European carbon tax.

"For exports, we are looking for new markets and trying to reach agreements with countries in the Middle East, where a lot of infrastructure is being built, as well as in Asia," said the source, who was directly involved in the decision-making process but declined to be identified because the deliberations are confidential.

The source added, "Until now, our exports have been concentrated on Europe, but we are trying to diversify."

The Indian federal steel ministry did not respond to an email requesting comment.

A senior executive at a major steel company said that factories are looking to government support to help them compete in markets outside the European Union where China dominates.