By Neha Dasgupta

NEW DELHI, June 26 (Reuters) - India's finished steel exports in May fell to their lowest in three years as shipments to traditional markets in the European Union (EU) and Nepal shrank, preliminary government data reviewed by Reuters showed.

India exported 319,000 tonnes of finished steel in May, down 28% from the same month last year and the lowest level since April 2016, the data showed.

Steel exports to the EU dropped 55% in May, led by fewer shipments to Italy, Belgium and Spain, which together made up about 80% of India's overall exports to the region.

That comes amid 'safeguard' measures by the EU that are designed to limit incoming steel and prevent a surge of imports as a result of Washington's 25% import tariffs, which have effectively closed the U.S.

market.

Indian exports to Italy slumped 65% to 23,000 tonnes, according to the data. Exports to Spain fell 41% to 13,000 tonnes, while shipments to Belgium were down 42% at 25,000 tonnes.

India, which typically ships cold-rolled coil, galvanized steel and some long products such as bars and rods to the EU, saw a decline in these shipments by as much as 30%.

Meanwhile, India's exports to Nepal, the top destination last year, were down 22% at 63,000 tonnes.

Shipments were also substantially lower to Malaysia and Sri Lanka, which were among the top 10 export destinations last year.

Exports of steel plate, DX51D Z100 which is one of the flat products that comprise most of India's steel exports, fell 60% to 14,000 tonnes, the data showed.

Shipments of pipes, which are typically the main steel product exported to the United States, dropped 97% to 2,000 tonnes.

Overall, India's finished steel exports were down 30% during April-May and the country remained a net importer.

Hit by low exports and facing higher imports, India's steel ministry has been pushing for higher import duties.

(Reporting by Neha Dasgupta; Editing by Joseph Radford)