EU deforestation law to affect Indian exports

The deforestation law adopted by the European Union aims to prohibit several products in the EU that were produced on land, and deforested after 31st December 2020. The law could affect India’s exports. 

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The embracement of new deforestation regulations by the European Union (EU) could affect India’s exports of coffee, leather, paper and wooden furniture and some other products. The European Union has approved a deforestation law in order to ban imports of such products into the EU, which involved destruction of the forests.

A report by the economic think tank Global Trade Research Initiative (GTRI) said, “For the products covered under the Carbon Border Adjustment Mechanism (CBAM) and EUDR, EU’s share in India’s global exports is 23.6%. Most such exports will be adversely affected. The product list will be expanded soon.”

The deforestation regulation will require companies that export goods to the European Union to produce a ‘due diligence statement’ and verifiable information proving their goods were not grown on land deforested after 2020. For larger firms, it will be effective from December 2024 whereas the smaller firms will be required to comply from June 2025.

As per the report, the law will affect 479 tariff lines in addition to the 777 lines covered by the carbon tax mechanism. Both measures are anticipated to impact almost US$10 billion of exports to Europe based on 2022 data. 

Malaysia, Indonesia, Brazil, Argentina, Ecuador, Peru, Guatemala, and Costa Rica. Colombia, Côte d’Ivoire, India, and Vietnam would be the most adversely affected countries.