Should the current regime of low customs duties end, it would make Indian goods more expensive with exporters paying anywhere between 6% and 12% more. “We have a month before the new GSP (generalised system of preferences) regime ends to convince the EU,” an official familiar with the development told Financial Express in India.

The EU has decided to “graduate” exports of several items including textiles, chemicals, minerals, leather goods and motor vehicles from India out of its GSP scheme with effect from January 2014. Preferential or nil customs duty to exports from developing nations under GSP is an exception to the World Trade Organisation obligation of member states to give every other member equal and non-discriminatory treatment under the ‘Most Favoured Nation’ status. India’s exports to the European Union, which accounted for 17% of the country’s total exports, shrank by over 4% in 2012-13 to $50 billion.

According to official sources, India’s commerce ministry will also protest the EU’s move to simultaneously grant zero customs duty on textile imports from Pakistan from January.