Under the new framework that will reshape the rules of global trade, quality and price alone will no longer be sufficient for products sold in Europe - producers must also prove that their goods are not linked to deforestation. The EUDR will apply to large and medium-sized operators and traders from December 30, 2026.

MSMEs, however, have been granted an additional year to prepare, and the regulation will now apply to them from June 30, 2027.

From coffee, rubber and timber to cocoa, soy, palm oil, and livestock-based products, every supply chain seeking access to the European market will now have to demonstrate that the land used for production was not associated with deforestation after December 31, 2020.

It is going to be a trade barrier, but this affects not just India. This is a challenge that we collectively face

- Anil Bhardwaj, Secretary General, Federation of Indian Micro and Small & Medium Enterprises (FISME)

A new era of global trade is emerging, where market access will depend not only on quality and competitive pricing but also on environmental responsibility, traceability, and transparency.

What It Means For India

For countries such as India, where millions of small farmers and MSMEs form the backbone of export-oriented supply chains, the EUDR is not merely another regulation - it is a new condition of global commerce.

Its significance has grown further amid ongoing discussions on the India–EU Free Trade Agreement (FTA). In the years ahead, Indian exporters seeking to retain their foothold in European markets will need to do more than increase production; they will also have to maintain a digital proof trail from farm to market for every product they export.

Under the regulation, companies importing covered commodities into the EU must demonstrate that their products do not originate from land that was deforested after December 31, 2020.

Here comes the dichotomy: should traders adhere to the definition of “deforested lands” as postulated by the EU or their own respective jurisdictions?

Moreover, are MSMEs, particularly those operating in fragmented agricultural and forest-based supply chains, prepared?

Need For Certification Mechanism

“We are studying the situation. We are working along with the government. A dedicated certification mechanism should be implemented. This should be approved by the EU as well,” Bhardwaj told The Secretariat.

The real challenge is not the regulation itself, but the requirements that come with it: end-to-end traceability, geolocation mapping of farms and plantations, digital documentation, supplier due diligence, and compliance reporting.

Large exporters may have resources to implement these systems, but MSMEs often work with thousands of small farmers and traders, making data collection and verification difficult

Darshana Thakkar, Mentor, Women Entrepreneurship Platform (WEP), NITI Aayog, and Founder, Strategy Hub

“However, the regulation should not be viewed only as a compliance burden. It is also pushing Indian MSMEs towards greater transparency, sustainability, and digitalisation of supply chains, which will become essential for global competitiveness,” Thakkar told The Secretariat. 

Which Sectors Will Be Most Affected?

India exports more than 70% of its coffee production, and nearly 60% of those exports go to Europe, making compliance crucial for growers.

Coffee exporters now need farm-level geolocation data, traceability records, and due diligence statements proving that cultivation is not linked to post-2020 deforestation. Wayanad in Kerala alone has tens of thousands of farmers needing registration.

Reports indicate 30,000+ coffee farmers in Wayanad still need registration and mapping efforts to meet compliance requirements.

“For India, the most immediate impact is expected in coffee exports, rubber products, wood and furniture manufacturing, and paper and packaging industries. These sectors have significant exposure to European markets and depend on complex supplier networks,” Thakkar pointed out.

According to Thakkar, coffee traders must adopt four strategies: farm geolocation mapping (GPS-based identification of plantations and digital farm records and polygon mapping); traceable procurement systems (linking each coffee lot to its source farm and creating auditable records throughout the supply chain); farmer aggregation models (cooperatives and Farmer Producer Organisations helping small growers meet compliance requirements); and technology adoption (satellite verification, supply-chain software, and QR-based traceability systems).

Defining Deforestation

A major concern for Indian exporters is whether the EUDR's definition of deforestation aligns with Indian legal classifications of forest land.

The EU determines whether land is deforested based on the UN Food and Agriculture Organization (FAO) standard.

Under the FAO standards, deforestation is defined as the direct, human-induced or natural conversion of forest land to non-forest land use. The FAO establishes strict parameters regarding land size, canopy cover, and land use to determine exactly when land is classified as deforested.

In India, however, forest governance is spread across multiple laws, including the Indian Forest Act, 1927, the Forest (Conservation) Act, 1980, and recent amendments to forest legislation. Land may be recorded as revenue land, plantation land, private agricultural land, or forest land, depending on state records and historical classifications.

Though challenges persist, the landmark mandate is also widely seen as a silent opportunity to modernise supply chains and strengthen global competitiveness, as sustainability and traceability will become as important as quality and cost in the coming decade. “The biggest risk is that smallholders lacking documentation could be excluded from premium EU markets. Therefore, industry associations, the Coffee Board, exporters, and government agencies will need to collaborate to ensure compliance support reaches smaller growers,” says Thakkar.