EU Labels India 'Low-Risk' For Deforestation IEA Raises Concerns Over Critical Mineral Supply Chains

(MENAFN- KNN India) New Delhi, Jun 3 (KNN) India has been designated a "low-risk" country under the European Union's Deforestation Regulation (EUDR), offering significant compliance relief for Indian exporters in sectors such as coffee, cocoa, soy, rubber, and wood products.

The classification exempts Indian firms from extensive due diligence, risk assessment, and mitigation requirements, streamlining access to the European market.

Under the EUDR, companies must demonstrate that products exported to the EU are not linked to land cleared of forests after December 2020.

While India's low-risk status simplifies regulatory procedures, government officials continue to press for further relaxation, citing disproportionate compliance burdens-especially on small and medium-sized enterprises.

Indian negotiators have raised concerns about the regulation's impact in ongoing free trade discussions with the EU, viewing it as a non-tariff barrier targeting developing economies.

The deforestation norms are among several contentious issues under bilateral negotiations, which also include the EU's Carbon Border Adjustment Mechanism (CBAM).

Indian officials are seeking a broader review of both frameworks to ensure equitable treatment of emerging economies.

Meanwhile, energy security and supply chain resilience have emerged as critical themes in India's global trade dialogue.

Following talks with Commerce and Industry Minister Piyush Goyal, International Energy Agency (IEA) Executive Director Fatih Birol voiced concerns about the global concentration of mining and processing operations for critical minerals-resources vital for clean energy technologies, defense, artificial intelligence, manufacturing, and semiconductors.

Birol emphasised that overreliance on limited sources, particularly China's dominant position in lithium and other minerals, could destabilise global supply chains and inflate prices amid rising geopolitical tensions.

He underscored the importance of diversification as a strategic response to mitigate supply shocks.

In the context of clean mobility, Birol urged governments-especially oil-importing nations like India-to increase incentives for electric vehicle (EV) adoption.

He argued that current oil price levels create a favorable environment for accelerating EV transitions, which are already economically viable in many markets.

The IEA estimates that electric vehicles will increasingly dominate global transportation due to cost advantages and supportive policies.

India's efforts in the clean energy transition were lauded, with Birol citing programs like Ujjwala and nationwide LED distribution as examples of impactful public initiatives.

He noted a marked shift in investment trends, highlighting that India now allocates four dollars to clean energy for every dollar spent on fossil fuels-a reversal from prior parity.

(KNN Bureau)

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