EU Deforestation Regulation (EUDR): How and why should Indian businesses act now?

With the extended deadline for EUDR implementation inching closer, and given the voluminous and technical assessment that it may entail, here's a practical run-it-now checklist for Indian businesses:

1.      Check if EUDR is relevant to your business

Regulation (EU) 2023/1115 applies to relevant commodities that presently cover cattle, cocoa, coffee, oil (palm), rubber, soya and wood, and to persons responsible for placing goods in the EU market who must undertake a due diligence assessment. There is an extension of obligations to those who supply goods to persons responsible for placing goods in the EU market for provision of relevant information for the due diligence assessment.

2.      Check for applicability at HS-code level

Map every product line against Annex I of Regulation (EU) 2023/1115, including derivatives ordinarily not associated with the seven commodities (e.g. tyres, furniture, paper, palm-derivative soaps, oil cake). It is recommended to track the draft delegated act too for additions and deletions.

3.      Determine role in the supply chain 

Obligations and liabilities vary depending on the place and role in the supply chain such as whether one is the "first placer" on the EU market (which could be through an EU subsidiary), or a supplier to an EU importer who files the Due Diligence Statement (DDS). Accordingly, it will be determined as who has the responsibility to file the DDS or deliver a DDS-ready data package to the EU buyer. Currently, the first placer has to file the DDS but the responsibility to collect and provide data will be on the Indian partner’s side contractually and/or logistically.

4.      Map your supply chain back to the plot

Every aggregator, cooperative, trader and intermediary between the farm and the factory gate must be identified. Mark where traceability breaks. There is a risk at smallholder tier. Only after identification of the gap, can fixing solutions be thought of.

5.      Start geolocation capture immediately

GPS points for plots under 4 hectares are required. Polygons are recommended for larger plots. Mechanisms such as engaging field agents with offline mapping apps for smallholder chains may be considered. Given that the process of collection of relevant data may take several months and the deadline is 30 December 2026, it is only prudent to act now.

6.      Ensuring compliance under Indian laws and preparing sufficient documentation

Undertake a legal assessment to check compliance regarding land-use and revenue records, state felling and transit rules, Forest Rights Act, FPIC environmental clearances, labour law etc. Legality under Indian law is a mandate under EUDR. Procure and maintain evidentiary proof towards compliance under Indian law for it to be produced to the EU importers. This is crucial as the EU importers are not present in India and this documentation can significantly affect the assessment at their end.

7.      Segregate compliant and non-compliant material

It is to be ensured that there is no mixing with material of unknown origin which could be at the mill, warehouse, or consolidation point or any other place. It is pertinent to remember that one untraced lot contaminates the whole shipment and puts the EU importer and the Indian suppliers and the whole product category at risk.

8.      Revisit contracts

Contractual obligations to be reassessed and clear distinction of responsibilities should be placed. Attention should be paid to clauses relating to data-provision obligations, geolocation warranties, audit rights, and indemnities for coordinate errors or DDS defects etc. Renegotiation can be undertaken while suppliers still have time to comply rather than refuse.

9.      Discuss data formats and logistics

While this may sound obvious and simple, details like data format, platform and timeline can affect DDS filing significantly more than what it seems. EU importers will naturally incline towards ready suppliers.

10.  Set up records and systems for the five-year retention rule 

Documentary evidence must be maintained for five years and records should be produced and handed over keeping the retention rule.

11.  Audit of marketing claims alongside compliance

Tying the EUDR and Empowering Consumers for the Green Transition Directive (ECGT), it is important to understand that deforestation free is a legal requirement and not an additional feature. Marketing claims to be made accordingly to ensure there is coherence and compliance of all regulations.