European Union suspends preferential export benefits for Indian textiles, plastics from Jan 1

New Delhi: The European Union has suspended export benefits for sectors such as textiles and plastics under its Generalised Scheme of Preferences (GSP) for India and two other countries from January 1. The commerce ministry said the move will not impact India’s exports to the 27-nation bloc, noting that the EU has progressively withdrawn GSP tariff preferences for India since 2016 across products including minerals, chemicals and textiles, with further expansion in 2019 and 2023.

Under regulations issued on December 1, 2025, GSP preferences will remain suspended for the same list of products from January 1, 2026 to December 31, 2028. As a result, about 47 per cent of India’s exports to the EU in 2024-25, valued at $35.6 billion, are already outside the GSP, while 53 per cent, worth $40.2 billion, remain eligible.

However, exporters and experts warned of a significant impact. The Global Trade Research Initiative (GTRI) said that from January 1, 2026, nearly 87 per cent of India’s exports to the EU will face higher import duties, with only about 13 per cent—mainly agriculture and leather—retaining preferences. GSP concessions earlier allowed exports at lower-than-MFN tariffs, which have now ended for most products.

The EU has withdrawn GSP benefits across major industrial sectors, including minerals, chemicals, plastics, textiles, metals, machinery, electrical goods and transport equipment. GTRI said the move coincides with the start of the tax phase of the EU’s Carbon Border Adjustment Mechanism, raising near-term trade barriers despite optimism around an India-EU free trade agreement.

India’s goods trade with the EU stood at $136.53 billion in 2024-25, with exports of $75.85 billion and imports of $60.68 billion.