India may urge airlines to opt out of ETS

India may urge its airlines not to take part in the European Union Emissions Trading Scheme (ETS), a senior official said, the latest salvo in an escalating row over an EU law requiring all flights in and out of Europe to pay for their emissions. China in February said its airlines were barred from participating in the scheme unless they get government approval to do so. Beijing has also suspended the purchase of $14 billion worth of planes for Europe’s Airbus due to the dispute. India does not yet plan to ask airlines to cancel Airbus purchases, but that is a possibility if the dispute escalates, the Indian official said. The official, with direct knowledge of talks between the EU and other countries on the issue, told Reuters that India would soon ask local airlines not to share emissions data with the bloc or buy any carbon credits. If the European Commission retaliated by suspending Indian airlines from flying to Europe, India would make similar moves and consider charging an “unreasonable” amount for flying over India, the official said on Monday. “We have lots of measures to take if the EU does not go back on its demands. We have the power of the economy; we are not bleeding as they are,” the government official said, adding that Europe’s position would harm its own economy and airlines. The Indian government is awaiting formal approval from several ministries to implement the order to airlines, which it expects soon, the official said. “The questions is, ‘Are you (the EU) provoking the world into a trade war?” the official said. Amber Dubey, director for aviation at global consultancy KPMG, said India was in the midst of a huge increase in the size of both its civilian and defence fleets, with a significant share of the orders coming from European suppliers. “The EU-ETS issue is escalating fears of a trade war between the EU and the rest of the world. There is a chance that the government may decide to use these large aircraft orders as a negotiating tool,” Dubey said. European planemaker Airbus has a 73 per cent share of the commercial plane market in India. It has orders for more than 250 planes with IndiGo, Go Air and Kingfisher Airlines, making fast-growing India a crucial growth market.