After Omnibus I: What the EU Rollback Really Means for Indian Suppliers

What Omnibus I actually did

The sequence

The rollback came in two stages, and conflating them produces date errors.

April 2025: the stop-the-clock directive. Directive (EU) 2025/794 postponed the reporting waves for large companies and listed small and medium enterprises by two years, and delayed the due diligence timetable by one. This was pure deferral. Scope was untouched.

February and March 2026: Omnibus I. Directive (EU) 2026/470 was agreed by the European Parliament in December 2025, adopted by the Council on 24 February 2026, published in the Official Journal on 26 February 2026 and entered into force on 18 March 2026. This changed scope, not merely timing.

The CSRD, narrowed

The Corporate Sustainability Reporting Directive required in-scope companies to report extensive sustainability information against detailed European Sustainability Reporting Standards, using double materiality: how sustainability matters affect the business, and how the business affects society and the environment.

Omnibus I raised the threshold to companies with more than 1,000 employees and above €450 million in net turnover, which removes the large majority of previously in-scope entities. A transition exemption is available for wave-one companies that had begun reporting, but it is a Member State option rather than an automatic release, and it covers only financial years beginning between 1 January 2025 and 31 December 2026. Financial year 2024 reports were already published and are unaffected. A wave-one company below the new thresholds continues to report unless its Member State exercises the option.

For third-country undertakings the reporting requirements now apply only where the parent generates net turnover above €450 million within the Union in each of the last two consecutive financial years and has an EU subsidiary whose net turnover exceeds €200 million, or, where there is no such subsidiary, a branch in the Union exceeding that same €200 million. Two points are easily lost. The €200 million test governs both limbs, so it is not the case that any EU subsidiary will do. And the branch limb is not a free-standing alternative: it is reached only in the absence of a qualifying subsidiary.

The CSDDD, narrowed and deferred

The Corporate Sustainability Due Diligence Directive is the more consequential instrument for suppliers, because it imposes a substantive duty rather than a reporting one: to identify, prevent and remedy adverse human rights and environmental impacts across a company's chain of activity.

• Element: EU companies; Position after Omnibus I: More than 5,000 employees and €1.5 billion net worldwide turnover
• Element: Non-EU companies; Position after Omnibus I: €1.5 billion net turnover generated in the EU, with no employee test
• Element: Transposition into national law (due diligence); Position after Omnibus I: 26 July 2028
• Element: First application by in-scope companies; Position after Omnibus I: 26 July 2029
• Element: First reporting; Position after Omnibus I: Financial years beginning on or after 1 January 2030

Two features of that table are routinely misreported.

The non-EU test has no employee limb. A large Indian group with substantial European sales can be directly in scope on turnover alone, without any European headcount. The common formulation "5,000 employees and €1.5 billion" describes only the EU test.

The dates are a year later than most published guidance states. Due diligence transposition is 26 July 2028 and application is 26 July 2029. The 2027 and 2028 pair belongs to the superseded stop-the-clock position and is still widely quoted.

Omnibus I carries two transposition deadlines, not one. The reporting side, meaning the CSRD together with the Accounting and Audit Directive amendments, must be transposed by 19 March 2027. The due diligence side must be transposed by 26 July 2028. A source that gives a single Omnibus I transposition date is describing only one of the two, and for a company tracking when its European customers come under the revised reporting rules, the earlier date is the operative one.

What else changed in the due diligence regime

Omnibus I did more than move thresholds and dates. It thinned the substantive mechanism in ways that matter to suppliers:

Risk-based due diligence. The obligation is explicitly risk-based, with priority given to direct business partners rather than full-chain cascading.

The termination obligation was removed, but the duty to suspend a business relationship was retained. Where an adverse impact cannot be prevented or adequately mitigated, the requirement to terminate the relationship is gone. The duty to suspend it is not, so an exit-side obligation survives and it would be wrong to tell a supplier that the directive no longer reaches the continuation of the relationship.

The climate transition plan duty was repealed outright. Article 22 of the original directive required in-scope companies to adopt and put into effect a transition plan for climate change mitigation aligned with the Paris Agreement. Omnibus I deleted it. An intermediate negotiating position would have softened it from "put into effect" to "adopt"; that is not what survived. There is now no substantive due diligence duty to adopt or implement a transition plan, only reporting on the sustainability reporting side about a plan a company has voluntarily adopted. Of everything Omnibus I removed, this is arguably the deepest cut.

The penalty basis changed direction. The original Article 27 set a floor on the maximum, requiring that pecuniary penalties be capped at not less than 5 per cent of net worldwide turnover. Omnibus I replaced that with a genuine EU-wide ceiling of 3 per cent, and dropped turnover as the mandatory calculation basis.

EU-harmonised civil liability was deleted. Liability is left to member state law rather than an EU-level regime.

A value chain information-request cap was introduced. Requests to smaller business partners must be targeted, reasonable and proportionate, and used only where the information cannot reasonably be obtained otherwise.

Full harmonisation was extended to core due diligence mechanics, which constrains member states from imposing stricter national variants in those areas.

Two figures circulate because the directive uses both. The protection runs to undertakings with fewer than 1,000 employees, which may decline requests going beyond the voluntary SME standard; the SME and small mid-cap definition itself runs to 500 employees. A source quoting 500 is citing the definition, one quoting 1,000 is citing the protection.

What this means for an Indian supplier

The genuine relief

Fewer European buyers are directly in scope, so fewer will be transmitting due diligence obligations down their supply chains. The obligations that do arrive will arrive later, from July 2029 rather than 2027 or 2028. The demands will be narrower, prioritising direct business partners rather than cascading to every tier. And the information requests should be more proportionate, at least for smaller suppliers.

This is real. A mid-sized Indian supplier to a mid-sized European buyer may now face no CSDDD-derived contractual pressure at all.

The three reasons not to relax

Your largest customers are still in scope. The threshold removed mid-sized European buyers. It did not remove the multinationals, and those account for a disproportionate share of Indian supply contracts by value. If your business is concentrated among large European customers, your exposure is substantially unchanged.

Contractual expectations outlive legal obligations. Many European companies built supplier due diligence programmes between 2022 and 2025 in anticipation of the original timetable. Those programmes exist, staff run them, and systems have been paid for. They are unlikely to be dismantled because the legal deadline moved. Suppliers should expect the questionnaires to keep arriving whatever the directive says.

Other instruments filled the space. This is the decisive point, and it is the subject of the next section.

What Europe kept, and what it added

The rollback was asymmetric. Europe reduced what its own companies had to report and investigate. It did not reduce the conditions attached to goods crossing its border.

The EU Forced Labour Regulation. Regulation (EU) 2024/3015 entered into force on 13 December 2024 and applies from 14 December 2027. It is not a due diligence duty calibrated to size but a prohibition on outcome: products made wholly or partly with forced labour may not be placed on the Union market, made available on it, or exported from it. It covers every sector, goods of any origin, and carries no employee or turnover threshold at all.

For an Indian supplier that has just worked out the CSDDD no longer reaches it, this is the instrument that does, and it arrives two years earlier than CSDDD application.

The EU Deforestation Regulation. Postponed twice, and its filing architecture simplified, but the substantive requirement is untouched. From 30 December 2026 an exporter of coffee, leather, rubber or wood products must still demonstrate deforestation-free, geolocated, lawfully produced origin.

The pattern is consistent. Reporting burdens on European companies were cut. Market-access conditions on imported goods were preserved or extended.

How to work out your actual exposure

A four-step assessment.

Step one: are you directly in scope? Only if your group crosses the non-EU turnover test of more than €1.5 billion in net turnover within the European Union. There is no employee test for non-EU companies. Most Indian suppliers will answer no; the largest groups should check rather than assume.

Step two: are your customers in scope? Ask them. A European buyer with more than 5,000 employees and €1.5 billion net worldwide turnover will be in scope from July 2029 and will be building for it well before. A buyer below that threshold will not be, though it may still have contractual programmes.

Step three: what does your contract already say? Supplier codes, audit rights and information covenants signed in 2023 and 2024 were drafted against the original timetable. They bind on their own terms regardless of what the directive now says. This is where most Indian suppliers' actual obligations sit.

Step four: which non-CSDDD instruments reach you? Forced Labour Regulation from December 2027 with no threshold. Deforestation Regulation from December 2026 if you handle covered commodities. These are unaffected by Omnibus I.

Frequently asked questions

What is Omnibus I? Directive (EU) 2026/470, adopted by the Council on 24 February 2026 and in force from 18 March 2026, which narrowed the scope of the Corporate Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directive and deferred their timetables.

What is the CSRD threshold now? More than 1,000 employees and above €450 million in net turnover. For third-country undertakings, net turnover above €450 million in the Union in each of the last two consecutive financial years, together with an EU subsidiary above €200 million or, where there is none, a branch above €200 million.

What is the CSDDD threshold now? For EU companies, more than 5,000 employees and €1.5 billion net worldwide turnover. For non-EU companies, including Indian-parented groups, €1.5 billion net turnover generated within the European Union, with no employee test.

Can an Indian company be directly subject to the CSDDD? Yes, if it generates more than €1.5 billion in net turnover within the European Union. There is no employee requirement for non-EU companies.

When does the CSDDD actually apply? Transposition into national law is due by 26 July 2028 and first application by in-scope companies is 26 July 2029, with first reporting attaching to financial years beginning on or after 1 January 2030.

Is 26 July 2027 the transposition date? No. That is the superseded stop-the-clock date. Omnibus I moved transposition to 26 July 2028.

Does the rollback mean Indian suppliers face less pressure? Partly. Fewer European buyers are in scope and the timetable is later. But the largest buyers remain in scope, existing contractual programmes are unlikely to be dismantled, and the Forced Labour Regulation applies from December 2027 with no size threshold.

What was removed from the due diligence obligation itself? The obligation to terminate business relationships, and the EU-harmonised civil liability regime. Due diligence was also made explicitly risk-based with priority to direct business partners, a value chain information-request cap was introduced, and full harmonisation was extended to core mechanics.

What did Europe not cut? The conditions attached to goods entering its market. The Deforestation Regulation's substantive requirement survives its postponements, and the Forced Labour Regulation applies from 14 December 2027 with no threshold at all.