India to urge airlines to boycott EU carbon scheme

India will urge its airlines to boycott the European Union's carbon charge scheme, raising the prospect of a global trade war over an European Union law requiring flights in and out of Europe to pay for their greenhouse gas emissions.

A senior Indian government official with direct knowledge of talks between the EU and other countries on the issue said India would soon ask local airlines not to share emissions data with the bloc or buy any carbon credits.

China said in February its airlines were barred from participating in the EU Emissions Trading Scheme unless they got government approval. Beijing has also suspended the purchase of $14 billion worth of jets from European maker Airbus.

India does not yet plan to ask airlines to cancel Airbus purchases, but that is possible if the dispute escalates, the Indian official said.

If the European Commission then stopped Indian airlines from flying to Europe, India would retaliate with 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.