India is threatening to impose counter-sanctions on European airlines if Brussels goes ahead with its “carbon emissions trading scheme” that could affect the state-owned airline’s rise from bankruptcy. Brussels intimidated ten airlines from India and China after they failed to disclose information on their carbon emissions, which goes against measures to curb pollution in EU airways. Airlines could face bans from flying into any country in the EU.

The scheme was questioned by several countries such as the US and Russia, and industry executives, saying that sanctions and bans could create a rift in aviation industry given the eurozone crisis and slower consumer demand. Willie Walsh, chief executive of International Airlines group, criticized Brussels’ “arrogant approach” and calls it “crazy” to risk a trade war over emissions trading.

EU are negotiating for a global deal that would defuse tensions over the scheme and said it would amend its scheme according to the UN International Civil Aviation Organisation.

India has only two airlines which fly to Europe – Air India and Jet Airways. Air India is a state-owned airline on the verge of bankruptcy in spite of government bailouts. Aji Singh, India’s civil aviation minister, said “We can’t keep pouring money – it’s public money”. Air India pilots are on protest over pay and training schedules.