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What is the story about?
Commenting on the European Union’s GSP (Generalised System of Preferences) Regulation 2025, which takes effect from January 1, 2026, India’s Commerce Ministry said the new regulation impacts only 2.66% of India’s exports to the 27-member bloc.
The EU’s GSP is a unilateral trade preference scheme under which the bloc grants reduced or zero customs duties on imports from developing and least-developed countries. The scheme 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.
Tiers under the GSP scheme
There are three tiers under the EU’s GSP framework:
EU’s latest GSP regulation
The European Commission has adopted Implementing Regulation (EU) 2025/1909, which lays down rules for the suspension of specific tariff preferences for certain GSP beneficiary countries, including India, for the period 2026–2028. The regulation entered into force on January 1, 2026, and will remain in effect until December 31, 2028.
Under the new GSP treatment, agricultural tariff lines are not graduated. In the non-agricultural sector, only leather has been reinstated.
The suspension covers thirteen GSP sections, including: 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 and steel and articles thereof; base metals (excluding iron and steel) and articles thereof; machinery and mechanical appliances; electrical machinery and equipment and parts thereof; railway or tramway locomotives and rolling stock; motor vehicles, bicycles, aircraft and spacecraft; ships and boats.
In 2023, EU imports from India amounted to approximately €62.2 billion, of which only €12.9 billion was eligible under the EU’s Standard GSP framework. India has graduated from 12 major product categories. Under the new regulation, the Commerce Ministry expects €1.66 billion of trade to graduate out of the GSP regime, leaving eligible GSP trade at €11.24 billion, based on 2023 data.
The Commerce Ministry said the graduation process is based on the competitiveness of a country’s exports, which is periodically reviewed by the EU, and attributed India’s graduation over time to the growing competitiveness of its exports.
The EU’s GSP is a unilateral trade preference scheme under which the bloc grants reduced or zero customs duties on imports from developing and least-developed countries. The scheme 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.
Tiers under the GSP scheme
There are three tiers under the EU’s GSP framework:
- Standard GSP: For low and lower-middle-income developing countries that meet certain conditions. India currently receives benefits under Standard GSP.
- GSP+: An enhanced incentive scheme under which countries must ratify and implement a set of international conventions on labour rights, human rights, environment, and governance.
- Everything But Arms (EBA): Under this tier, least-developed countries receive duty-free, quota-free access for all goods except arms.
EU’s latest GSP regulation
The European Commission has adopted Implementing Regulation (EU) 2025/1909, which lays down rules for the suspension of specific tariff preferences for certain GSP beneficiary countries, including India, for the period 2026–2028. The regulation entered into force on January 1, 2026, and will remain in effect until December 31, 2028.
Under the new GSP treatment, agricultural tariff lines are not graduated. In the non-agricultural sector, only leather has been reinstated.
The suspension covers thirteen GSP sections, including: 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 and steel and articles thereof; base metals (excluding iron and steel) and articles thereof; machinery and mechanical appliances; electrical machinery and equipment and parts thereof; railway or tramway locomotives and rolling stock; motor vehicles, bicycles, aircraft and spacecraft; ships and boats.
In 2023, EU imports from India amounted to approximately €62.2 billion, of which only €12.9 billion was eligible under the EU’s Standard GSP framework. India has graduated from 12 major product categories. Under the new regulation, the Commerce Ministry expects €1.66 billion of trade to graduate out of the GSP regime, leaving eligible GSP trade at €11.24 billion, based on 2023 data.
The Commerce Ministry said the graduation process is based on the competitiveness of a country’s exports, which is periodically reviewed by the EU, and attributed India’s graduation over time to the growing competitiveness of its exports.
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