However, the Commerce Ministry has said that the new regulation affects only 2.66 per cent of India’s exports to the EU, and not 87 per cent. In a note, the ministry clarified that the European Commission has adopted Implementing Regulation (EU) 2025/1909, which sets out the rules for suspending specific tariff preferences for certain GSP beneficiary countries, including India, for the period 2026–2028. The regulation formally came into force on January 1, 2026, and will remain applicable until December 31, 2028.
Under the revised GSP framework, agricultural tariff lines have not been graduated. Within the non-agricultural segment, only leather products have been reinstated under the preference regime. The suspension applies to thirteen specific GSP sections, including mineral products; inorganic and organic chemicals; plastics and related articles; rubber and related products; textiles; articles of stone, plaster, cement, asbestos, mica or similar materials; ceramic products; glass and glassware; pearls and precious metals; iron and steel and related articles; base metals other than iron and steel and articles thereof; machinery and mechanical appliances; electrical machinery and equipment and parts; railway or tramway locomotives and rolling stock; motor vehicles, bicycles, aircraft and spacecraft; and ships and boats.
According to the ministry, EU imports from India were valued at approximately €62.2 billion in 2023. Of this, only €12.9 billion was eligible for benefits under the EU’s Standard GSP framework, as India has already graduated from 12 major product categories. Under the new regulation, an estimated €1.66 billion worth of trade is expected to graduate out of the GSP regime, reducing the eligible GSP trade value to about €11.24 billion based on 2023 data.
Viewed in this context, the ministry said, the new regulation impacts only around 2.66 per cent of India’s total exports to the EU. It added that the graduation process is based on the competitiveness of a country’s exports and is periodically reviewed by the European Union. India’s graduation from multiple product categories over time, the ministry noted, reflects the increasing competitiveness of its exports rather than a punitive trade action.
What is Generalised System of Preferences
The European Union’s Generalised System of Preferences (GSP) is a unilateral trade preference programme through which the EU offers reduced or zero customs duties on imports from developing and least-developed countries. The scheme is designed to support export-led growth in beneficiary countries by improving their access to the EU market.
GSP is a non-reciprocal arrangement, meaning beneficiary countries are not required to offer similar concessions in return. It functions as an exception to the World Trade Organization’s Most-Favoured-Nation (MFN) principle. The scheme’s permanent legal basis under WTO law is the 1979 Enabling Clause, which permits developed countries to extend differential and more favourable tariff treatment to developing nations.
The EU’s GSP framework is structured across three distinct tiers. The Standard GSP applies to low- and lower-middle-income developing countries that meet specified eligibility criteria. India is a beneficiary under this standard GSP category. The GSP+ scheme offers enhanced tariff preferences but requires beneficiary countries to ratify and effectively implement a set of international conventions covering labour rights, human rights, environmental protection and good governance.
The third tier, known as Everything But Arms (EBA), applies to least-developed countries. Under EBA, eligible countries receive duty-free and quota-free access to the EU market for all products, with the sole exception of arms and ammunition.
