India may bar Europe carriers in climate tax row

(NEW DELHI) - India said it may stop European carriers from flying into the country if the European Union bans airlines from the South Asian nation that boycott the EU's new emissions fee system.

"We will take retaliatory actions to counter steps taken by the EU. If Europe bans our carriers we will ban theirs as well," the senior government official, who did not want to be named, told reporters late Friday.

The EU in mid-May gave India and China a month to comply with the airline carbon emissions fee system across the 27-nation bloc, or face penalties for flights into and out of Europe.

EU Commissioner for Climate Change Connie Hedegaard said all EU airlines and "nearly all" world airlines had agreed to hand over emissions data required under the controversial carbon levy that took effect on January 1.

"There has been a very, very high level of compliance... the only exception is Chinese and Indian carriers," she said earlier this month.

While some 1,200 airlines have complied with the EU requirements, eight Chinese and two Indian airlines representing less than three percent of aviation emissions in the bloc have refused.

India and China have attacked the EU scheme, calling it a unilateral trade levy disguised as an attempt to fight climate change. India in April barred its airlines from complying with the EU carbon fee, joining China in resistance.

The EU says the tax aims to help it achieve a goal of cutting emissions by 20 percent by 2020 and has said no airline will face a bill until 2013 after this year's carbon emissions have been tallied.

It says the cost for the airlines is manageable, calculating that the scheme could force the carriers to add between 4.0 euros ($5.00) and 24 euros to the price of a long-haul round-trip.

European authorities have warned that the Chinese and Indian carriers could face penalties if they fail to submit data by an extended deadline of June 15.

European authorities said that, as a final measure, banning repeat offenders could be considered.

-- Dow Jones News Wires contributed to this story --