The European Commission has proposed to defer by one year the implementation of its controversial EU Deforestation Regulation (EUDR), which was strongly opposed by many countries including India, the US, Brazil and Indonesia.

It has assured that following its methodology of categorisation of suppliers, most exporting countries of identified agro-based products would be marked as low-risk, and will be subject to less scrutiny, and support would also be provided to smallholders, per an official statement issued on Wednesday.

“Given feedback received from international partners about their state of preparations, the Commission also proposes to give concerned parties additional time to prepare. If approved by the European Parliament and the Council, it would make the law applicable on December 30, 2025 for large companies and June 30, 2026 for micro- and small enterprises,” the EC said in its statement.

India, however, will continue to discuss with the EU the difficulty that the small farmers and landholders would face in meeting the costly and burdensome EUDR procedures of maintaining land records and establishing traceability without financial and technical assistance, a source tracking the matter told businessline.

The EUDR, which requires exporters of palm oil, cattle, soy, cocoa, coffee, rubber, and timber and a range of derived items to the bloc to prove that the items did not originate from recently deforested land (post December 31, 2020), forest degradation, or breaches local environmental and social laws, could hurt Indian exports of an estimated $1.3 billion annually once implemented, according to industry estimates.

Last week, the EU had said at the WTO that it wanted to roll out the EUDR by the year-end as planned but this was opposed by a number of members including India, the US, Indonesia, and Brazil. Many other countries such as New Zealand, Australia, Brazil, Indonesia, Paraguay, Ecuador, Guatemala and Thailand, had earlier criticised the regulation and sought more time.

“The EUDR compliance rules are complicated. EU should use this extra time to simplify the regulations instead of turning them into a way to protect local companies or generate revenue,” according to Ajay Srivastava, Founder, Global Trade and Research Initiative (GTRI).

Products such as coffee ($435.4 million), leather hides and skins ($83.5 million), oil cake ($174.5 million), paper and paperboard ($250.2 million), and wood furniture ($334.6 million) are directly impacted by the regulation, according to GTRI’s estimates.

India had raised concerns on how low income farmers would be protected against the high compliance cost of the regulation and the proposed benchmarking of countries by the EU into high risk, standard and low risk countries.

The EC assured that following the methodology it has come up with, a large majority of countries worldwide will be classified as ‘low risk’. “This will give the opportunity to focus collective efforts where deforestation challenges are more acute,” it said.

It further stated that it had identified five priority areas of action such as support to smallholders, eight key principles such as a human rights-centred approach, and several implementation tools including dialogue and financing.

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