The European Union has suspended tariff concessions under its Generalised Scheme of Preferences (GSP) for a broad range of Indian products, including ready-made garments, textiles, plastics and other industrial goods, effective January 1, 2026. The GSP program previously allowed Indian exporters to pay lower duties than standard most-favoured-nation (MFN) tariffs when selling goods in the EU market, but the updated regulation now removes these advantages for most categories until December 31, 2028.
Think tanks and industry groups estimate that roughly 87 % of Indian exports to the EU will now face full MFN tariffs, weakening the price competitiveness of Indian products in the 27-member bloc. Sectors such as minerals, chemicals, plastics and rubber, iron and steel, machinery, electrical goods and textiles form the backbone of exports affected by the change, potentially increasing costs for European importers and putting pressure on Indian manufacturers.
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The decision comes at a sensitive moment in ongoing negotiations between India and the EU on a Free Trade Agreement (FTA). While both sides have signalled progress toward concluding the deal, any final agreement would still need time for implementation, leaving exporters to contend with higher tariffs in the interim.
India’s Ministry of Commerce has noted that the GSP suspension reflects the country’s graduation status under EU trade rules, and that changes in tariff treatment are linked to export competitiveness and evolving trade dynamics.
