The European Union’s Deforestation Regulation (EUDR) is set to take effect this Tuesday, and India is urgently called upon to align with this regulatory framework. According to research by the Global Trade Research Initiative (GTRI), India’s substantial USD 1.3 billion in agricultural exports to the EU may face significant impacts starting in December 2024 due to the EUDR and the EU’s Foreign Subsidies Regulation (FSR), both imposing intricate compliance requirements. GTRI underscores the necessity for exporters to enhance awareness and implement efficient track-and-trace methods to meet these obligations.
Passed by the European Union Council on May 16, 2023, the EUDR aims to ensure that any product supplied to the EU was grown on land not cleared of trees before December 31, 2020. The regulation is anticipated to affect various Indian exports, including wood furniture, food, oil cake, coffee, paper, paperboard, and leather hides and skins. Large enterprises will be subject to these laws beginning in December 2024, while small businesses must comply by June 2025.
Ajay Srivastava, a co-founder of GTRI, emphasizes that compliance laws must be adhered to, even if a product is not cultivated on deforested land. He points out that the EU intends to increase import costs through a convoluted compliance structure, potentially impacting India’s exports more significantly due to its higher rate of deforestation.
Violators of the EU’s Deforestation Regulation face severe consequences, including fines of up to 4% of annual sales inside the EU and the possibility of having goods and transaction proceeds seized. The EUDR classifies plantation land as cleared, further complicating issues. GTRI’s analysis underscores the difficulties Indian exporters may encounter in establishing that their items originate from land not cleared of trees beyond December 31, 2020.
India ranks second only to Brazil in terms of the amount of forest loss between 2015 and 2020, according to GTRI. Concerns arise over the disappearance of natural forests, and the EUDR’s compliance strategy necessitates extensive trace and track systems. The research proposes that the Indian government cooperate with other affected countries to resolve the issue at the World Trade Organization (WTO) and recognize the EUDR as a legal necessity, refraining from requesting exemptions.
Exporters are urged to highlight compliance obligations and make use of blockchain-enabled trace and track technologies to lessen the effects. Such a framework already exists for grape exports to the EU through the Agricultural and Processed Food Products Export Development Authority (APEDA); it might be expanded to encompass other pertinent items.
In conclusion, pre-emptive steps are crucial to manage the complications and maintain India’s lucrative agricultural exports to the European Union as the Deforestation Regulation (EUDR) takes effect, and the country struggles to satisfy the compliance standards.
