India’s exports of about $1.3 billion to the EU could get affected every year by the European Union Deforestation Regulation (EUDR) adopted earlier this week, economic think tank Global Trade Research Initiative (GTRI) said on Thursday.
The products to get affected from India are coffee, leather hides, skin, preparations, oil cake, paper and wood furniture.
Almost 1,200 Indian tariff lines (products) will covered under the Carbon Border Adjustment Mechanism and EUDR, the EU’s share of which in India’s total exports is 23.6%. Most such exports will be adversely affected, GTRI said.
“EU DR will adversely affect India’s exports to the EU of the value of $1.3 billion (CY2022 data),” said Ajay Srivastava, co-founder of GTRI, adding that the product list will be expanded soon.
The EU Council, on Tuesday, adopted the EU Deforestation Regulation as per which exporters to the EU must ensure that these products have been grown on the land which has not been deforested after December 31, 2020.
“The products targeted by the EUDR are those the EU wants to reduce imports of while promoting exports and its desire to bolster local production, and it is already competitive in many of these products
as evidenced by its global export of $96.2 billion compared to imports of $91.9 billion in 2022,” he said.
The EU aims to further cut imports through the implementation of the EUDR.
“It appears to prioritize protecting its own agricultural sector and promoting exports, making imports more difficult,” Srivastava said.
The new rules will apply to large firms from December 2024 and small firms June 2025.
As per the report, the EU Deforestation Regulation claims to combat deforestation though the bloc’s EU’s primary forests cover less than 0.7% of total forest area, compared to the global average of 33%.
“The EU has a highly protected agricultural sector, largely dominated by large global firms,” GTRI said.
Trade in agricultural products within the EU has nearly tripled between 2002 and 2022, with exports growing at a higher rate than imports. In 2022, the EU had a surplus of $36.2 billion, exporting $247.4 billion worth of agricultural products while importing $211.2 billion.
Srivastava said that besides being discriminatory, the move will add to compliance costs as exporters must have to prove supply chain integrity through an elaborate trace and track system starting from Indian farm to EU markets, ensure that produce complies with “relevant laws” like land use, labor and human rights in the country of origin, and carry out risk mitigation and submit a due diligence statement to the importers there before exporting.
Source Name:Economic Times