India may drag EU to WTO over carbon tax on airlines

India may consider dragging European Union to the World Trade Organisation if the 27-nation bloc goes ahead with its contentious plan to impose carbon tax on non-EU airlines, sources said.

According to the EU plan, non-European airlines will have to pay a price for emission of carbon dioxide. From January 2012, airlines flying into or out of EU airports will have pay a tax to cover the Co2 emission they emit during the entire flights.

"We have opposed this. The move is against EU's international commitment in WTO. It will distort trade in goods. If the EU will not defer its plan, we may consider dragging them to WTO," an official said.

However, efforts will be made to resolve the issue by talking bilaterally to each of the EU members, he said.

Finance Minister Pranab Mukherjee also strongly opposed the EU plan while he was in Paris last week for the G20 meeting.

"India believes that some of the measures like carbon export optimisation tax...Violate the principles of the Convention (United Nations Framework Convention on Climate Change) as their incidence falls entirely on developing countries and these cannot be recognised as a source of new and additional finance for climate change," Mukherjee had said.

The move has not gone well with the aviation industry as well.

The International Civil Aviation Organisation (ICAO) Council, of which India is a member, has criticised the EU's plans to charge airlines for carbon emissions.

At its meeting last month, the ICAO described it as discriminatory and violative global laws.