What are the EU's GSP benefits for India?

The EU's GSP provides reduced import tariffs for eligible developing countries, including India, making their exports more competitive.

When will India's exports face higher EU tariffs?

Indian exports will face higher EU tariffs starting from January 1, 2026, due to the suspension of GSP benefits.

How does the EU's Carbon Border Adjustment Mechanism affect India?

The CBAM imposes a carbon cost on certain imports, potentially increasing costs for Indian exporters coinciding with the loss of GSP benefits.

Home / Business and Economy / EU Tariffs Hit India: 87% of Exports Face Higher Costs

EU Tariffs Hit India: 87% of Exports Face Higher Costs

22 Jan

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Summary

EU suspends GSP benefits for 87% of Indian exports from Jan 1, 2026.
Textiles and other key goods will face higher import duties.
This coincides with the EU's Carbon Border Adjustment Mechanism.

EU Tariffs Hit India: 87% of Exports Face Higher Costs

Effective January 1, 2026, India's export landscape to the European Union will undergo a significant shift. The EU has suspended benefits under its Generalized Scheme of Preferences (GSP) for a substantial 87% of Indian exports. This move will result in increased import tariffs for key sectors.

Previously, Indian exporters enjoyed reduced tariffs under the GSP. However, with this suspension, only about 13% of products will retain preferential treatment. For instance, apparel that previously incurred a 9.6% duty will now be subject to the full 12% tariff. This policy change impacts minerals, chemicals, textiles, machinery, and transport equipment.

This development is poised to affect India's trade as the suspension aligns with the EU's Carbon Border Adjustment Mechanism (CBAM). While the EU periodically adjusts GSP benefits, this withdrawal for 2026-2028, based on graduation rules, is expected to have a sharp economic impact. The timing is critical, as it precedes the anticipated conclusion of the India-EU Free Trade Agreement (FTA) around January 27, 2026.