India-EU Trade Pact: 90% of Indian Goods Set for Duty-Free Access

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New Delhi: In a significant development, the proposed India-European Union free trade agreement (FTA) is expected to grant duty-free access to over 90% of Indian goods in the EU market. This move is seen as a major boost for Indian exporters, who will no longer require the EU's Generalised Scheme of Preferences (GSP) benefits. According to sources, the FTA will eliminate almost all tariff and non-tariff barriers, while protecting the sensitivities of both sides. The EU's suspension of preferential trade benefits, which currently impacts less than 3% of Indian exports, is expected to become irrelevant after the pact comes into force. Experts believe that Indian exporters across sectors will benefit from the FTA, as customs duty on almost all items they export to the 27-country bloc will become zero. "GSP will not be relevant after implementation of the India-EU free trade deal as [tariff] concessions under the FTA will be much more than what is available under GSP," said Ajay Sahai, director general and CEO of the Federation of Indian Export Organisations. The EU's GSP benefits are unilateral, non-reciprocal, and non-discriminatory, extended to developing countries based on certain conditions. However, with the proposed FTA, Indian exporters will no longer require these benefits, as they will enjoy duty-free access to the EU market. According to the EU's notification, the suspension of GSP benefits covers 13 specific sections, including mineral products, textiles, and machinery. However, India's agricultural lines are spared, and the country has graduated from 12 major product categories. In 2023, EU imports from India amounted to approximately €62.2 billion, with only €12.9 billion eligible under the EU's standard GSP framework. The new regulation is expected to impact only 2.66% of India's exports to the EU. The graduation process is based on the competitiveness of a country's exports, which is periodically reviewed by the EU. India's graduation over time is on account of the increasing competitiveness of its exports. The proposed FTA is expected to be concluded on January 27, marking a significant milestone in India-EU trade relations. The pact is seen as a major step towards enhancing market access and ensuring prosperity and stability for both countries.