Writer: Sahar Saini

We’re in the final countdown. December 30th, 2024, is just around the corner—which means we're six months away from the compliance deadline for the European Union Deforestation Regulation (EUDR)

Big news from the European Union: they've rolled out a fresh piece of legislation called the European Union Deforestation Regulation (EUDR), and it’s a game-changer for anyone selling goods to Europe. Passed by the European Council with a resounding majority, this law is all about tackling the global deforestation crisis.

So, what's the deal? If you're an exporter, you'll now need to prove that your products aren't contributing to deforestation, or you might face some hefty fines. The law is gunning to eventually ban products that are driving deforestation. We're talking about stuff like palm oil, cattle, timber, cocoa, coffee, rubber, and soy. And don’t forget the goods made from these, like beef, chocolate, furniture, and printer paper. These have all been flagged as the usual suspects in deforestation.

But don’t worry, nothing’s getting outright banned. Instead, companies will need to submit a “due diligence” statement. This means they’ll have to prove their products haven’t come from deforested land or contributed to deforestation, including primary forests, after December 31, 2020. On top of that, companies must ensure their products comply with the laws of the country where they were produced and that the rights of indigenous peoples are respected.

Now, here's where it gets tricky. Smaller businesses might feel the pinch more due to the high costs of meeting these new requirements. Some fear this could push them out of the global trade game. But the EU isn’t messing around; they’ve set up a four-tier penalty system for lawbreakers. Violations could mean fines up to four times a company’s EU turnover, product confiscations, revenue seizures from transactions, and being blacklisted from public procurement processes. Why is the EU so serious about this? They’re taking responsibility for their part in global deforestation, which they say is about 16% of tropical deforestation tied to international trade. This legislation is a big piece of the EU's Green Deal puzzle, aiming for net-zero emissions by 2050. 

Deforestation releases stored carbon back into the atmosphere, driving up temperatures and fueling climate change, so the EU's cracking down hard. In short, the EUDR is a bold step by the EU to combat deforestation, protect forests, and fight climate change. And if you're in the business of exporting to Europe, it's time to get your paperwork in order!

What does this mean for India?

The EU's new rule affects around 479 items that India exports to Europe, which adds up to a whopping $1.3 billion annually. Considering that the EU makes up about 23.6% of India’s global exports, this could really shake things up. Industries like coffee, leather, paper, and wooden furniture are going to feel the heat the most. The real impact of the EUDR on Indian exports will hinge on how well our exporters can comply with the new rules and keep their competitive edge in the European market.

The Bright side—VECTRA is your trusted partner!

Luckily, Indian exporters are pretty adaptable and have a solid track record of meeting international standards, making their products highly desirable around the world. And of course, VECTRA is here to help and support businesses like yours in any way we can. We as VECTRA pride ourselves as being a Trusted Global Partner for EUDR Compliance. We aim to support you in enhancing traceability across your supply chains, simplifying compliance with EUDR requirements, and ensuring a responsible future. We’re here to provide you with indispensable insights to navigate the complexities of EUDR compliance successfully. In short, while the new EU deforestation regulation presents challenges, we’re ever so ready to help you tackle them head on and to keep your exports flowing smoothly to Europe.

We haven’t got much time, so let’s work together—talk to our experts now.