EU's New GSP Rules Affect Only 2.66% of India's Exports to Bloc

The European Union's Generalised System of Preferences (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 official said.

In 2023, EU imports from India amounted to approximately EUR 62.2 billion. Of this, only EUR 12.9 billion was eligible under the EU's Standard GSP framework. India has graduated from 12 major product categories. As per new Regulation, EUR 1.66 billion of trade is expected to graduate out of GSP regime leaving the eligible GSP trade to be EUR 11.24 billion as per 2023 data, the official said.

The European Commission has adopted Implementing Regulation (EU) 2025/1909, laying down rules for the suspension of specific tariff preferences for certain GSP beneficiary countries, including India, for the period 2026-2028. The regulation formally entered into force from 1 January 2026 until 31 December 2028.

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

The official said that suspension covers thirteen specific GSP sections such as 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 (excl. iron and steel), articles of base metals (excl. iron and steel); Machinery and mechanical appliances; electrical machinery and equipment and parts thereof; Railway or tramway locomotives, rolling-stock; Motor vehicles, bicycles, aircraft and spacecraft, ships and boats.

Notably, there are three tiers under the scheme. One is standard GSP for low and lower-middle income developing countries that meet certain conditions. India gets the benefit under standard GSP.

Second is GSP+ which is an enhanced incentive scheme; countries must ratify and implement a set of international conventions on labour, human rights, environment, governance.

The official said that the third is Everything But Arms (EBA) in which the least developed countries get duty-free, quota-free access for all goods except arms.

- ANI