NEW DELHI: The European Union has officially renotified the list of products that will continue to receive preferential tariff benefits for Indian exports until December 2028, according to government officials. This move comes as part of the EU's regular review process under the Generalized System of Preferences (GSP) framework, which aims to support developing economies through trade concessions.
Gradual Reduction in GSP Benefits for Indian Exports
Over recent years, the benefits extended to Indian exports under the GSP scheme have seen a significant reduction. Currently, approximately 47 percent of India's total exports to the European Union, valued at an estimated $35.6 billion, fall outside the scope of the EU's preferential tariff list. This shift reflects the "graduation" rules inherent in the GSP system, which mandate the withdrawal of preferences once exports in specific product categories exceed predetermined thresholds for three consecutive years.
Three-Year Review Cycle and Current Notification
The European Union is required to review its list of preferential products every three years. In the latest notification, the same set of goods has been approved for another three-year period, effective from January 1. Government officials in New Delhi confirmed that this renotification ensures continuity in tariff benefits for eligible Indian exports, providing stability for businesses engaged in trade with the EU.
Impact on Labour-Intensive Sectors and FTA Prospects
Officials highlighted that several labour-intensive sectors in India are poised to benefit significantly from the anticipated India-EU Free Trade Agreement (FTA), which is expected to be announced in the coming week. This bilateral agreement aims to enhance trade relations further, potentially offsetting some of the reductions in GSP benefits by creating new opportunities for Indian exporters in the European market.
The ongoing negotiations and the extended preferential tariffs underscore the evolving dynamics of India-EU trade relations, balancing existing frameworks with future agreements to foster economic growth and cooperation.
