EU's planned due diligence law sparks unease in India

NEW DELHI : A fresh European Union (EU) push to punish suppliers lax on the environment and human rights has sparked unease in New Delhi, given its potential to raise compliance costs and disrupt small businesses.

- Ravi Dutta Mishra

The EU directive on corporate sustainability due diligence, which is still in the draft stage, mandates large companies ensure their suppliers follow labour laws, protect human rights, stay clear of child labour and forced labour, and ensure occupational health and safety. According to EU, the new law “establishes a corporate sustainability due diligence duty to address negative human rights and environmental impacts".

“The due diligence proposal would impact our micro, small, and medium enterprises (MSMEs). There are 11 parameters that include labour standards and are based on the importers’ responsibility. So, if I am an EU importer sourcing my supply from India, then the burden of proof rests on the importer and not the EU. And in this scenario, India will lose business," a person aware of the matter said.