EU Suspends GSP Benefits For Indian Textile Exports From January 1
The European Union has suspended preferential tariff benefits for most Indian exports under its Generalised Scheme of Preferences (GSP) from January 1, 2026, affecting 87% of India’s shipments to the bloc, trade think tank GTRI said.
Only about 13% of exports, mainly agricultural and leather goods, will continue to enjoy reduced duties. Sectors losing benefits include textiles, garments, chemicals, metals, machinery and electrical goods, key components of India’s export basket.
With the change, products such as apparel will now pay full MFN tariffs, undermining India’s price competitiveness and potentially diverting EU orders to duty-free suppliers like Bangladesh and Vietnam.
The withdrawal coincides with the rollout of the EU’s Carbon Border Adjustment Mechanism (CBAM), posing higher compliance and tariff costs for Indian exporters. The suspension will remain in place from 2026 to 2028 under the EU’s graduation rules.
The development comes even as India and the EU are set to conclude negotiations on a long-pending free trade agreement on January 27. However, implementation may take a year or more, creating a difficult transition period.
The EU is India’s largest goods trading partner, with bilateral trade touching US$ 136.53 billion in 2024-25.
