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Last updated: 11 Mar, 2019  

Indo-Us.9.Thmb.jpg GSP withdrawal

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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.

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