India bars its airlines from paying EU carbon tax

India has barred its airlines from complying with the European Union carbon tax scheme, joining China in resistance to plans that have caused a backlash among the EU's trade partners. The European Union imposed a carbon levy on air travel with effect from January 1, but no airline will face a bill until 2013 after this year's carbon emissions have been tallied.
Civil Aviation Minister Ajit Singh told parliament on Thursday that "the imposition of carbon tax does not arise" because Indian airlines would simply refuse to hand over their emissions data. "Though the European Union has directed Indian carriers to submit emission details of their aircraft by March 31, 2012, no Indian carrier is submitting them in view of the position of the government," he said.
India's resolution to boycott the scheme follows China's decision last month to prevent its airlines from complying with the EU directive. The two Asian giants have attacked the EU scheme, calling it a unilateral trade levy disguised as an attempt to fight climate change.
According to a so-called Moscow declaration adopted last month by countries opposed to the tax, governments have decided on a list of retaliatory measures to be taken if necessary, including banning their airlines from participating. It also allows governments to take tough retaliatory measures against EU carriers and aviation companies and impose their own taxes on EU airlines.
The 27-nation EU has said the carbon tax will help it achieve its goal of cutting emissions by 20 percent by 2020 and that it will not back down on the plan. It claims that the cost for the airlines is manageable, estimating that the scheme could prompt them to add between 4.0 euros ($5.50) and 24 euros to the price of a long-haul round-trip.
Industry insiders have expressed concern that the scheme could spark a trade war between the EU and the countries opposed to the tax. The chief executive of European plane manufacturer Airbus, Thomas Enders, called for a "freeze" on the EU plan Thursday, saying that it would otherwise cost the sector thousands of jobs. "Delay it, freeze it for one or two years," he said according to Dow Jones Newswires, arguing that the scheme "will do nothing but induce strife... retaliation and counter-retaliation." Earlier this month the head of the Airbus parent company EADS said Beijing had already begun to block purchases of Airbus planes by Chinese companies in reaction to the dispute.