The government is mulling a law to ban Indian airlines from participating in the European Union's stringent carbon tax scheme.

India is considering its first retaliatory steps in the wake of 26 key nations' decision - including Russia and China -during a meeting in Moscow on Wednesday to confront the EU for unilaterally imposing carbon taxes on all flights landing or flying out of the eurozone.

While the Indian flight operators could also be banned from accepting the EU conditions under an executive order, New Delhi is mulling if a law would provide a more robust legal defence to its decision in case of a legal challenge at home or any dispute settlement mechanism abroad as per a report in TOI by Nitin Sethi.

Sources in the government said that disallowing Indian operators from taking part in the EU directive could be the easiest first step to retaliate against what it sees as purely a trade measure being bandied as a climate change bogey.

Though the EU tax scheme is in place, the process begins only next year, giving India a year to put in place its counter-measures. Imposing allowances, levies, cess and counter-tax on European air services could be the next step, government sources told TOI. This would help the government collect an equal amount of money from the EU operators to compensate for the additional cost to be incurred by its own airline operators.

While European fliers run more than 180 flights to India under current bilateral agreements, India runs less than 100. Also a substantial numbers of fliers to Europe, the government has noted, are passengers in transit to other destinations. These passengers could easily bypass eurozone, while availing other international routes.

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