European Union has suspended its Generalized Scheme of Preferences (GSP) tariff benefits for a broad range of Indian exports from January 1, 2026, a move expected to raise import duties and weaken India’s price competitiveness in the EU market, according to a report by The Hindu.
The suspension follows a regulation adopted by the European Commission on September 25, 2025, and will apply for the 2026–2028 period. The decision effects India, Indonesia and Kenya, as published in the Official Journal of the European Union.
The development comes at a sensitive moment, with India and the EU set to announce the conclusion of their free trade agreement (FTA) negotiations on January 27. According to the Global Trade Research Initiative (GTRI), nearly 87% percent of India’s exports to the EU will now be subject to higher most-favored-nation (MFN) tariffs following the withdrawal of GSP benefits. Only about 13% of exports, mainly agricultural and leather products, will continue to receive preferential access.
Under the GSP scheme, Indian exporters previously enjoyed reduced duties on EU-bound shipments. For instance, apparel products that attracted a 12% tariff were charged 9.6% under GSP. With the suspension, exporters must now pay the full MFN rate.
EU has withdrawn GSP concessions across almost all major industrial sectors, including textiles and garments, plastics and rubber, chemicals, iron and steel, machinery, electrical goods and transport equipment, which together form the core of India’s export basket to Europe. While the EU has reduced preferences in the past, this marks a complete withdrawal for three years.
EU remains one of India’s largest trading partners, with bilateral goods trade valued at $136.53 billion in 2024–25, accounting for around 17% of India’s total exports.
