After a carbon tax was levied on aviation by the European Union (EU), the government is now preparing for a possible trade war with the European Commission (EC) imposing a similar tax on shipping business as well. The move can increase freight rates by 3%-15%, TNN reports.
With EU mulling a tax on the shipping industry that will impose a levy based on carbon emissions on ships entering European waters, the Indian government has prepared a policy document to examine impacts of such a move and list measures to retaliate what it sees as a unilateral move.
The government has also asked aviation sector players in India not to communicate with EU on the carbon tax it has imposed. The decision was taken after official meetings, with the aviation ministry now empowered to take progressively stronger steps to block the EU decision.
EU had demanded that airlines flying into European airspace start providing data that would allow regulators to measure the carbon imprint of the flights and levying taxes at the end of the year. Sources in the government said Indian airlines were being asked to ensure that regulations against the government policy are not accepted.
India, along with other key countries, like China, Brazil, the US and Russia had agreed to a basket of actions against EU if the latter does not back off. The committee of secretaries agreed to take those measures in sequential manner upgrading the offensive against EU.
India has argued that imposition of carbon tax on aviation or maritime activity must adhere to the principles agreed to under the UN Framework Convention on Climate Change. That would ensure that it is the manufacturers of inefficient craft that are taxed for emissions and not consumers.
China has also asked its airline services to not adhere to the European regulations on carbon tax. There has also been speculation of a Chinese airline cancelling orders from the European manufacturer leading to heightened tension in the markets about an all out trade-war breaking out. India's move to also restrict its airlines from participating in the European carbon tax scheme is expected to add fuel to the fire.
With EU mulling a tax on the shipping industry that will impose a levy based on carbon emissions on ships entering European waters, the Indian government has prepared a policy document to examine impacts of such a move and list measures to retaliate what it sees as a unilateral move.
The government has also asked aviation sector players in India not to communicate with EU on the carbon tax it has imposed. The decision was taken after official meetings, with the aviation ministry now empowered to take progressively stronger steps to block the EU decision.
EU had demanded that airlines flying into European airspace start providing data that would allow regulators to measure the carbon imprint of the flights and levying taxes at the end of the year. Sources in the government said Indian airlines were being asked to ensure that regulations against the government policy are not accepted.
India, along with other key countries, like China, Brazil, the US and Russia had agreed to a basket of actions against EU if the latter does not back off. The committee of secretaries agreed to take those measures in sequential manner upgrading the offensive against EU.
India has argued that imposition of carbon tax on aviation or maritime activity must adhere to the principles agreed to under the UN Framework Convention on Climate Change. That would ensure that it is the manufacturers of inefficient craft that are taxed for emissions and not consumers.
China has also asked its airline services to not adhere to the European regulations on carbon tax. There has also been speculation of a Chinese airline cancelling orders from the European manufacturer leading to heightened tension in the markets about an all out trade-war breaking out. India's move to also restrict its airlines from participating in the European carbon tax scheme is expected to add fuel to the fire.