EU’s new GSP suspension to impact just 2.7% of Indian exports, commerce ministry says

In 2023, EU imports from India totalled around €62.2 billion, but only €12.9 billion qualified for these preferential tariffs

The European Union’s broader suspension of the Generalised Scheme of Preferences (GSP) is set to affect only just 2.7 percent of Indian exports, the commerce ministry said on January 23.

Under the GSP, developing countries like India benefit from reduced tariffs when exporting to the EU, making their goods more competitive.

In 2023, EU imports from India totalled around €62.2 billion, but only €12.9 billion qualified for these preferential tariffs. With India graduating from 12 major product categories, about €1.66 billion of trade will no longer enjoy GSP benefits, leaving €11.24 billion still eligible under the scheme, the ministry clarified.

Graduation process is based on competitiveness of country’s exports which is periodically reviewed by EU.

India’s graduation over time is on account of increasing competitiveness of its exports.

The European Commission has adopted a new regulation (EU 2025/1909) that suspends certain GSP tariff benefits for some countries, including India, from January 1, 2026 to December 31, 2028.

Under the new GSP treatment, agricultural lines are not graduated. In the non-agricultural sector, only leather has been reinstated.

The suspension covers 13 specific GSP sections, including mineral products; inorganic and organic chemicals; plastics and articles thereof; rubber and articles thereof; textiles; articles of stone, plaster, cement, asbestos, mica or similar materials; ceramic products; glass and glassware; pearls and precious metals; iron, steel and articles of iron and steel; base metals (excluding iron and steel) and articles thereof; machinery and mechanical appliances; electrical machinery and equipment and parts thereof; railway or tramway locomotives and rolling stock; and motor vehicles, bicycles, aircraft, spacecraft, ships and boats.

The European Union’s GSP is a unilateral trade preference scheme under which the EU grants reduced or zero customs duties to imports from developing and least-developed countries.

The GSP is non-reciprocal and operates as an exception to the WTO’s Most-Favoured-Nation (MFN) principle.

Its permanent legal basis under WTO law is the 1979 Enabling Clause, which allows developed countries to grant differential and more favourable treatment to developing countries.

The European Union offers different trade benefits under the GSP scheme.

Standard GSP gives poorer and lower-middle-income developing countries, like India, easier access to EU markets.

GSP+ is an enhanced version that provides more benefits, but only to countries that follow international rules on labor, human rights, the environment, and governance, while Everything But Arms (EBA) gives the poorest nations duty-free, quota-free access to almost all goods except weapons.