With the European Union (EU) suspending the Generalised System of Preferences (GSP) for India from January 1, hardly 2.66% of India’s exports to the EU are likely to be impacted, clarified the Ministry of Commerce on Friday. While agricultural exports and leather products are exempted, 13 other sectors — including textiles, engineering goods, ceramics, glass and glassware, and pearls and precious metals—will lose GSP benefits.
“The new regulation impacts only 2.66% of India’s exports to the EU. Graduation process is based on competitiveness of a country’s exports which is periodically reviewed by EU. India’s graduation over time is on account of increasing competitiveness of its exports,” said the Ministry in a statement issued on Friday.
In FY 2024-25, total exports from India to the EU stood at $75.85 billion. Products on which GSP has been suspended include organic chemicals accounting for $5.07 billion of exports, pearls and precious metals ($2.5 billion) of exports and electrical machinery and equipment contributing $11.25 billion, showed official data. However, GSP on all these products not be suspended, clarified Federation of Indian Export Organisations (FIEO).
“The EU notification refers to broad product groupings, within which several products already attract zero customs duty under the EU’s MFN (Most Favoured Nation) regime, and therefore remain unaffected by the withdrawal of GSP preferences; and many specific tariff lines within these broad categories continue to be eligible for EU GSP benefits, subject to applicable rules of origin and conditions,” said FIEO.
According to the Ministry of Commerce, under new regulation, €1.66 billion of trade is expected to graduate out of the GSP regime leaving the eligible GSP trade to be €11.24 billion as per 2023 data. GSP is a unilateral trade arrangement under which developed economies extend customs duty concessions on select products imported from developing nations.
These benefits—ranging from partial duty cuts to full exemption—apply to goods that figure on the eligible product list of beneficiary developing countries. However, from January 1, 2026, India’s exports to the EU are facing higher tariffs after suspension of GSP benefits and exporters may need to pay the full 12% duty.