After Europe’s carbon tax, Germany props up fresh hurdles for Indian companies
NEW DELHI : Indian companies directly or indirectly in business with European firms face a twin hurdle as Germany tightens its screws on a new law aimed at ensuring fair labour standards and environmental requirements. For Indian businesses already subject to Europe’s carbon tax, Germany’s supply chain rules would mean additional compliance and reporting costs, apart from fines and loss of business opportunities for any violations, industry experts told Mint.
Germany’s Supply Chain Due Diligence Act (SCDDA) is aimed at ensuring that labour and contractual requirements are maintained across supply chains for businesses operating in the country. The Act, which was tightened in early 2024 after it was enforced last year, requires companies to identify, assess, prevent, and remedy any potential human rights and environmental violations, even if indirectly, across their operations and supply chains.
Companies must also provide ways for workers to file complaints about labour or environmental violations, even if these workers are employed with suppliers with whom the businesses don’t have a direct commercial relationship. All exporting nations including India, China and Vietnam will have to comply with Germany’s new regulation as well as with the European Union’s Carbon Border Adjustment Mechanism (CBAM) to do business in the continent, said Biswajit Dhar, a professor at the Centre for Economic Studies and Planning at Delhi’s Jawaharlal Nehru University.
“Market access for Indian companies can be impacted if they don’t follow strict labour standards laid out by Germany, which is likely to become a model for supply chains across the EU," he added. According to the Consulate General of India (Germany), Indian companies operate
. Read more on livemint.com
