Tamil Nadu’s MSMEs will face major carbon hurdles in coming years as European Union puts in place regulations that penalise exporting companies for their carbon footprint. The regulations, starting in 2026, will take away the price competitive advantage from Indian suppliers in the global supply chain. These regulations include EU Deforestation Regulation (EUDR) and EU cross border carbon policy which impose additional levies based on the “carbon weight of products”. Shipping will also come under carbon rules, making importing parts from cheaper locations uncompetitive for EU companies.