An applied research perspective from the Indian export ecosystem
Abstract
The European Union Deforestation Regulation (EUDR) represents a structural shift in how legality, sustainability, and traceability are evaluated in global wood supply chains. For Indian wood exporters—operating within complex domestic and international sourcing networks—EUDR does not merely introduce new compliance obligations. It exposes fundamental strengths and weaknesses in existing Chain of Custody (CoC) systems.
This article analyses the Indian wood trading and export landscape through a regulatory and operational lens and examines how EUDR can be leveraged to enhance CoC integrity. Drawing on applied due diligence models developed and implemented by Detroit Consultancy, the paper outlines a practical governance framework—referred to here as the Detroit Due Diligence Model—that aligns EUDR requirements with real-world sourcing conditions in India.
Introduction: From Certification to Defensible Traceability
For over two decades, Chain of Custody certification systems such as FSC have formed the backbone of market access for Indian wood exporters. These systems were designed to ensure material segregation, transaction traceability, and compliance with defined standards.
However, regulatory expectations have evolved. EUDR shifts the focus from certified compliance to defensible origin assurance. The regulation requires operators to demonstrate, with evidence, that wood products placed on the EU market are deforestation-free, legally produced, and supported by a structured risk-based due diligence system.
This transition raises an important question for Indian exporters: Are existing CoC systems sufficient to defend sourcing decisions under regulatory scrutiny?
Overview of the Indian Wood Sourcing Ecosystem
India occupies a unique position in the global wood trade, functioning simultaneously as a producer, processor, and exporter. Export-oriented manufacturers typically rely on a hybrid sourcing model comprising:
- Domestic timber from plantations, agroforestry, farm forestry, government auctions, and smallholder networks
- Imported raw materials—including logs, sawn timber, veneers, and panels—from Southeast Asia, Africa, Europe, Oceania, and Latin America
- Inputs procured through traders and aggregators rather than directly from forest concessions
While CoC certification provides transactional traceability, field observations and project experience at Detroit Consultancy indicate three recurring structural limitations:
- Over-reliance on documentation rather than origin verification
- Limited visibility beyond first-tier suppliers
- Inconsistent risk assessment across sourcing geographies
EUDR directly addresses these limitations.
EUDR Requirements and Their Implications for CoC Integrity
EUDR mandates that operators and traders placing wood products on the EU market conduct due diligence to ensure:
- Absence of deforestation or forest degradation after December 2020
- Compliance with applicable laws in the country of production
- Risk classification and mitigation prior to market placement
A defining feature of EUDR is the requirement for plot-level geolocation data and explicit risk evaluation. This fundamentally alters the role of CoC systems—from audit-focused compliance tools to governance mechanisms capable of supporting regulatory declarations. In this context, CoC integrity is no longer determined solely by segregation controls, but by the robustness of upstream data, risk logic, and evidence continuity.
Imported Wood: Applying Risk-Based Due Diligence
Imported wood represents the highest exposure point for Indian exporters under EUDR.
Traditional CoC approaches typically rely on supplier declarations, legality documents, and third-party certificates. While these remain relevant, EUDR requires additional analytical layers.
The Detroit Due Diligence Model structures imported wood assessment across four dimensions:
- Country risk profiling, aligned with EU benchmarking and governance indicators
- Supplier-level risk screening, incorporating legality history and operational transparency
- Geolocation verification, validating forest plots or concessions
- Risk mitigation protocols, including enhanced verification or sourcing adjustments
Integrating these steps within existing CoC systems transforms traceability from a reactive exercise into a defensible control framework.
Domestic Sourcing and the Formalisation of Assurance
Domestic wood sourcing in India—particularly from agroforestry and smallholder systems—has traditionally been treated as low risk but low visibility.
EUDR challenges this assumption. Exporters must now demonstrate that domestically sourced wood is derived from legally established land, free from post-2020 deforestation, and compliant with applicable regulations.
Under the Detroit Due Diligence Model, domestic sourcing assurance focuses on:
- Structured supplier onboarding and land record verification
- Origin mapping and material flow documentation
- Risk-based categorisation rather than blanket assumptions
This approach strengthens CoC credibility and enhances buyer confidence in domestic sourcing narratives.
Digitalisation as an Enabler of CoC Governance
One of the central findings from ongoing EUDR readiness projects is that manual, document-driven systems are insufficient for sustained compliance.
Detroit Consultancy’s implementation experience highlights the importance of integrated digital due diligence systems that support:
- Centralised supplier and material master data
- Traceability mapping across products and processes
- Automated risk logic aligned with regulatory expectations
- Controlled evidence management for audits and declarations
When embedded within CoC frameworks, these systems reduce audit friction, improve decision-making, and enhance organisational accountability.
Strategic Implications for Indian Wood Exporters
Positioning EUDR as a strategic lever rather than a compliance burden yields measurable advantages:
- Enhanced credibility with EU buyers and regulators
- Reduced exposure to shipment delays and market exclusion
- Stronger internal governance over sourcing decisions
- Long-term resilience against evolving sustainability regulations
From a governance perspective, EUDR effectively elevates CoC from a certification requirement to a core element of corporate risk management.
EUDR marks a turning point for the Indian wood export sector. It tests the real-world integrity of Chain of Custody systems and rewards organisations that invest in structured, risk-based due diligence.
Author note: Pradipta Mishra is associated with Detroit Consultancy and Dilify Technology works on regulatory due diligence, traceability systems, and sustainability governance across wood and forest-based supply chains.