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India is considering taking multi-pronged retaliatory measures against the European Union over the latter's carbon-emission-cap norm from January 1, 2012, for all airlines operating within and into the EU.
This is because the new emission caps would result in increased costs for airlines, including those from India such as Jet Airways, Kingfisher Airlines and Air India that have flights to the EU, leading to increased airfares. Besides, if the airlines pass on the compliance costs (including costs incurred on more fuel-efficient planes) by pushing up transportation prices of goods taken from India to Europe and vice-versa, it could make Indian exports uncompetitive.
Incidentally, the norm comes at a time when most Indian airline companies are struggling financially.
The proposed retaliatory measures by India could include litigation over the issue, annulment of some bilateral agreements, challenging the issue at the World Trade Organisation and raising the issue during the talks on the United Nations Framework Convention on Climate Change, official sources told Business Line .
Some kind of retaliatory measure can be taken concerning any sector that is of interest to the EU, including airlines, they added.
NOT TO IMPACT INDIA-EU FTA
However, they said, the new EU norm is not likely to impact the ongoing India-EU Broad-based Trade and Investment Agreement as the issue is being taken up with the EU separately on a bilateral level by the Civil Aviation Ministry by co-ordinating with the Commerce Ministry.
The International Civil Aviation Organisation had reportedly asked the EU to exempt non-EU airlines in its emissions trading system (ETS). This was on the lines of what India and many other countries had sought. Around 35 countries, including India, have opposed this EU norm on carbon-emission cap and have requested the EU to withdraw it, the sources said.
“They (EU) can impose any measure on their (EU-based) airlines. But when the same is being extended to companies from other countries also, it will affect their obligations with their trading partners,” an official said, adding, however, that the new norm is not India-specific and has affected even countries such as the US and China.
According to reports on the EU's ETS regulation, airlines from all nations would be taxed (they will have to buy extra carbon-emission allowances), if they exceed the specified emission cap while operating to and from the EU.
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