India's GSP benefits suspended by EU, export shipments affected
By yash chouhan 2026-01-23 19:01:42
EU Suspends India's GSP Export Benefits, Impacting Shipments
The European Union (EU) has suspended export benefits under the Generalized Scheme of Preferences (GSP) for India, Indonesia, and Kenya, effective January 1, 2026. This will impact India's shipments to the EU, particularly in the textiles, plastics, and other industrial sectors.
According to the EU's official journal, the suspension will be in effect from 2026 to 2028. The think tank Global Trade Research Initiative (GTRI) estimates that this decision will subject approximately 87% of India's exports to the EU to higher Most Favored Nation (MFN) tariffs, while only about 13% of exports—primarily agricultural and leather products—will retain GSP benefits.
Under the GSP, Indian exporters previously benefited from lower import duties. For example, apparel products faced a 9.6% duty instead of the standard 12%, but now the full duty will apply. This will increase costs and reduce competitiveness.
Experts say this move comes at a time when India and the EU are in the final stages of negotiating a Free Trade Agreement (FTA). However, the FTA's implementation may take time, leaving Indian exporters facing higher tariffs and increased compliance costs in the near future.
India's position in price-sensitive sectors like apparel could be weakened, and EU buyers may shift to duty-free suppliers like Bangladesh and Vietnam. According to FIEO, this decision eliminates an average tariff advantage of up to 20%.
India-EU bilateral trade stood at $136.53 billion in FY 2024-25, with the EU being India's largest trading partner. Therefore, the withdrawal of GSP benefits is expected to have a significant impact on India's overall exports.
