The retaliatory measures decided include reviewing or abrogating the bilateral service agreements and open skies' agreements with each European country, suspending all negotiations on operating rights for the EU airlines and aircraft operators and imposing additional levies and charges on flights coming in from European nations. The fallout could hit the domestic consumers hard since the number of European flights landing and flying from India could be reduced and the cost of tickets could increase exponentially.

The decision to launch an all-out trade war against EU airlines was taken at a meeting of the 26 countries in Moscow on Wednesday after the EU refused to withdraw the unilateral carbon tax on fliers from other nations. The measure would help EU pocket around $1.5 billion starting 2013 that will go up every year, thanks to the annual carbon tax at the cost of fliers from India and other countries ostensibly to combat climate change, some industry estimates have suggested.

The EU tax also falls foul of the UN Framework Convention on Climate Change and the International aviation agreements, according to India and like-minded nations in the group. The country representatives met to decide on a basket of measures that the group countries can pick to launch counter-attack against an obstinate EU.

New Delhi could also give orders to the Indian airlines not to participate in the EU carbon tax on aviation just like China has done, and other countries like Russia and Brazil are expected to follow suit soon.

If New Delhi goes ahead and imposes these measures it could mean taxing times ahead for those flying in and out of Europe from India. The flip side: the number of flights to and from Europe could be reduced with prices ratcheting substantially higher. Some of the key decisions taken in Moscow were filing application under the Chicago Convention on International Aviation and hauling EU to WTO dispute settlement. It also includes decisions to demand more data and information from EU carriers.

The full-blown trade war could also put the on-going climate talks for a future global regime in jeopardy as the BASIC nations - India, China, South Africa and Brazil - have earlier warned.

The meeting is a follow up of an earlier deliberation, held in Delhi, where these 26 nations had warned the EU against taking the unilateral decision when negotiations about greenhouse gas reductions are underway under the UN climate convention. India and other developing countries have all along insisted that aviation and maritime emissions should be tackled while keeping the principles of common but differentiated responsibilities in mind.