India-EU FTA may grant duty-free access to most Indian goods
24 Jan 2026

The proposed Free Trade Agreement (FTA) between India and the European Union (EU) may allow duty-free access to over 90% of Indian goods in the bloc.

The deal is also likely to shield India's sensitive dairy and agricultural items.

Once the FTA comes into effect, it will make the EU's preferential trade mechanism, or Generalized System of Preferences (GSP), irrelevant.

FTA to replace current preferential trade mechanism
Trade impact

Currently, the suspension of the preferential trade mechanism affects less than 3% of Indian exports to the EU.

The proposed FTA is expected to eliminate almost all tariff and non-tariff barriers while protecting the sensitivities of both sides.

This will ensure enhanced market access for both India and the EU, promoting prosperity and stability.

EU's GSP benefits suspension: A routine exercise
Trade regulation

The EU's decision to extend the suspension of preferential trade benefits for India from January 1 is seen as a routine exercise.

This is because concessional duty access to the EU market is unilaterally granted by Brussels to "vulnerable developing" countries.

The new regulation impacts only 2.66% of India's exports to the EU, according to a government spokesperson.

GSP benefits and India's export competitiveness
Trade dynamics

GSP benefits are unilateral, non-reciprocal, and non-discriminatory concessions given by certain developed countries to developing ones.

The EU also has a policy for deciding its GSP benefits, suspension, or withdrawal.

In 2023, India's exports to the EU amounted to some €62.2 billion, of which only €12.9 billion was eligible under the standard GSP framework.