Bikky Khosla | 11 Mar, 2019
US President Donald Trump last week announced that the US would end
India's $5.6 billion trade concessions under the Generalised System of
Preferences (GSP) programme. It was reported that the benefits would end in 60
days after notification to Congress and the Indian government. In support of
its decision, the US accused New Delhi of not providing Washington
"equitable and reasonable access" to its markets. So, how will the decision
impact our exports?
The government has downplayed the likely effects of this withdrawal of
benefits by the US for Indian exports. A top official from the Commerce
Ministry reacted that the concessions availed under the scheme were
"minimal" and therefore there would be no major impact on overall
Indian exports to the US. This view sounds convincing as the total GSP benefits
availed by India under the GSP programme was to the tune of $190 million on a
trade $5.6 billion.
In a similar tune, an exporters' association has
viewed that the GSP benefit withdrawal will have marginal impact on India's
exports. It adds that India is getting tariff preference on 5,111 tariff lines
out of 18,770 tariff lines in the US, but the tariff advantage was 4 percent or
more on only 2,165 tariff lines. However, the association views, that the
government should come out with incentives for those sectors where GSP tariff
advantage was significant, particularly in the labour-intensive sectors.
Meanwhile, India said that the US went ahead with the decision
although India was working out on an extensive, reasonable and meaningful
package which covered almost all the US concerns. It is also pointed out that
the decision will affect the price competitiveness of the US downstream
industry as India is predominantly exporting intermediate and semi-manufactured
goods to the US under the GSP. And ironically, a trade group even warned that ending
GSP for India could end up helping China.
I invite your opinions.