EU's GSP Suspension to Affect Only 2.66% of India's Exports, Says Ministry

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

In other words, the new regulation impacts only 2.66 per cent of India's exports to the EU, the statement said.

The graduation process is based on the competitiveness of the country's exports, which is periodically reviewed by the EU. India's graduation over time is on account of the increasing competitiveness of its exports.

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 on January 1, 2026, and will last until December 31, 2028.

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

The 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.

The European Union's 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 European Union offers different trade benefits under the GSP scheme. Standard GSP gives poorer and lower-middle-income developing countries, like India, easier access to EU markets.

GSP+ is an enhanced version that provides more benefits, but only to countries that follow international rules on labour, human rights, the environment, and governance, while Everything But Arms (EBA) gives the poorest nations duty-free, quota-free access to almost all goods except arms.

- IANS