Trade and sustainable development provisions now cover a growing range of environmental and labour issues in India’s free trade agreements. Forests have attracted less attention than carbon emissions or labour standards, although they are becoming part of the same negotiating agenda. Recent agreements show that India is prepared to accept commitments on sustainable forest management while adapting domestic trade policy to the sustainability requirements its exporters face abroad.
The change reflects commercial conditions as much as environmental policy. Buyers and regulators in major markets are demanding evidence about the origin of products and the conditions under which they were produced. For Indian exporters dealing in forest-linked commodities, certification and traceability can therefore affect access to markets and the cost of compliance.
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India enters these negotiations with an unusual forest record for a large developing economy. The Global Forest Resources Assessment 2025 says its forest area increased by 13 per cent between 1990 and 2020. Since 2020, the total has remained at about 72.3 million hectares, or 24 per cent of the country’s land area. Forests are also tied closely to rural livelihoods. The original policy challenge is therefore wider than conserving forest cover. Rules governing forest products affect people who depend on forests for income as well as firms that sell those products.
India has separately committed itself to the voluntary framework of the United Nations Strategic Plan for Forests 2017-2030. Its recent trade agreements now give forest policy another route into commercial regulation.
TSD provisions reach forest trade
The India-UK Comprehensive Economic and Trade Agreement, which entered into force on July 15, 2026, contains provisions on sustainable forest management in its environment chapter. The agreement calls for action against illegal logging and associated trade and refers to deforestation, forest degradation and biodiversity conservation.
The negotiated India-EU FTA goes further into the operational questions that exporters will encounter. Negotiations concluded in January 2026, although the text is still subject to legal revision before signature. Its trade and sustainable development chapter includes provisions dealing with forests and biodiversity. Cooperation is expected to cover traceability, certification and third-party verified standards.
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These provisions bring an existing Indian policy instrument into the trade discussion. The Indian Forest and Wood Certification Scheme provides voluntary third-party certification covering forest management, trees outside forests and chain of custody. Other commodity-specific certification systems have also developed. If foreign regulators and buyers accept credible Indian certification, exporters could avoid repeating parts of the same compliance process in different markets.
FTAs can provide a forum for pursuing such recognition. India can use sustainability committees and contact points created under the agreements to compare standards and discuss the treatment of certification systems. Recognition will depend on whether the Indian schemes meet the requirements imposed by the importing country. An FTA provision cannot by itself establish equivalence.
The European Union Deforestation Regulation illustrates the problem. It requires companies dealing in specified commodities to establish that products placed on the EU market meet deforestation and due-diligence requirements. Certification may help provide evidence, but it does not remove the operator’s legal responsibility. Indian exporters dealing in products covered by the regulation will need reliable information on sourcing and land use throughout their supply chains.
Britain is also developing due-diligence requirements for forest-risk commodities. The details differ from the EU regime, but both measures show how domestic environmental law in an importing country can affect exporters elsewhere. Indian trade negotiators will therefore have to deal with sustainability requirements arising outside an FTA as well as obligations written into the agreement itself.
Sustainability enters domestic trade policy
India’s foreign trade framework has begun to respond to these changes. Under the Export Promotion Mission, NIRYAT DISHA includes support for exporters dealing with sustainability and climate-related trade requirements. Deforestation-free supply chains are among the areas identified for attention.
That support can help smaller exporters understand certification and traceability requirements before they lose orders or encounter compliance problems. The cost is unlikely to be limited to paperwork. Firms may need new systems to identify suppliers, record the origin of raw materials and retain evidence that can withstand scrutiny in an overseas market.
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Trade finance has yet to develop at the same pace. Certification, data systems and changes in sourcing can impose costs before an exporter receives any commercial return. Sustainable finance products could help firms meet some of these expenses. The International Financial Services Centres Authority has already developed rules and guidance for sustainable and sustainability-linked finance in GIFT IFSC. The connection between these financial instruments and the compliance needs of ordinary exporters remains limited.
That gap will become harder to ignore as TSD provisions move from negotiated language to firm-level obligations. A large exporter may be able to absorb the cost of new traceability systems. Smaller suppliers further down the chain may not. Unless finance and technical support reach them, the burden of compliance could lead buyers to concentrate sourcing among firms that already have the required systems.
Forest-related trade rules also cut across administrative boundaries within India. The Commerce Ministry negotiates FTAs and administers foreign trade policy, while the Environment Ministry handles forest policy and certification issues. State governments control parts of the administrative machinery that determine how forests and forest products are managed on the ground. Financial regulators influence the availability of funding for compliance. Exporters encounter the combined effect of decisions taken by these institutions.
India will therefore need its domestic certification and traceability systems to withstand scrutiny in overseas markets. It will also need to use FTA committees to contest requirements that duplicate existing compliance without improving environmental outcomes.
The direction of European regulation suggests that forest-related conditions will remain part of trade policy. The EU has already linked the sale of specified commodities to deforestation due diligence, while the UK is preparing its own regime. India’s negotiating position will be stronger if exporters can document where products originate and how they were produced. Without that capacity, sustainability provisions negotiated in FTAs may leave Indian firms adjusting to standards designed elsewhere.
The authors work with CUTS International, a global public policy research and advocacy group.