87% of India's exports to EU pay higher import tariffs from Jan 1

GSP concessions allowed Indian exporters to export at less than most-favoured nation (MFN) tariffs to EU markets.

According to the Official Journal of the European Union, the European Commission on September 25 last year laid down rules for the application of the regulation with regard to the suspension for 2026-2028 of certain tariff preferences granted to certain GSP beneficiary countries, i.e., India, Indonesia and Kenya.

"It shall apply from 1 January 2026 until 31 December 2028...," it said.

The two sides are expected to announce the closure of negotiations for a free trade agreement (FTA) on January 27.

The EU has removed GSP benefits across almost all major industrial sectors: minerals, chemicals, plastics and rubber, textiles and garments, stone and ceramics, precious metals, iron and steel, base metals, machinery, electrical goods and transport equipment.

With the proposed FTA expected to take some time to get implemented, India's exports to the EU will face a difficult period marked by higher tariffs, rising compliance costs and weakened competitiveness.

India's trade in goods with the EU was worth $136.53 billion in fiscal 2024-25, with exports worth $75.85 billion and imports worth $60.68 billion. This made India the bloc’s largest trading partner for goods.

The EU market accounts for about 17 per cent of India's total exports, and the bloc's exports to India constitute 9 per cent of its total overseas shipments.

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