New Delhi, March 10 -- The European Union's stringent environmental regulations have become a significant obstacle in ongoing trade negotiations with India, according to a report released Sunday by the Global Trade Research Initiative (GTRI).

The think tank specifically highlighted the EU's carbon tax, deforestation rules, and supply chain due diligence laws as problematic areas.

The Carbon Border Adjustment Mechanism (CBAM) could potentially impose tariffs of 20-35 percent on Indian exports of steel, aluminium, and cement to the EU, even if a free trade agreement (FTA) is reached.

This has raised concerns that while European goods would enter India duty-free under an FTA, Indian exports would continue to face these indirect barriers w...