EU's Suspended GSP Benefits Challenge India's Export Competitiveness

The European Union has suspended preferential export benefits to India, impacting industrial sectors such as textiles and plastics. With 87% of exports now subject to full tariffs, India faces increased trade barriers. The move coincides with ongoing FTA negotiations and the EU's new Carbon Border Adjustment Mechanism.

In a significant development, the European Union has suspended export benefits under its Generalised Scheme of Preferences (GSP) for India, particularly affecting sectors like textiles and plastics. This decision, effective from January 1, echoes earlier reductions and marks a shift in India's trade dynamics with the EU.

Experts warn that the suspension could adversely impact Indian exports, which have already been grappling with previous GSP preference withdrawals. The EU remains one of India's largest trading partners, and this move could strain bilateral trade further, especially amidst ongoing free trade agreement negotiations expected to conclude on January 27.

As industry voices express concern over India's reduced competitive edge, the GSP suspension is poised to increase tariffs for approximately 87% of Indian exports to the EU. Meanwhile, competing nations like Bangladesh and Vietnam stand to gain traction, benefiting from duty-free access to the European market.