US Withdrawal Of Trade Concessions: What It Means For India

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The US government has decided to withdraw trade concessions granted to India under the Generalised System of Preferences (GSP). The programme, which allows duty-free entry for certain products into the US market, has benefited both countries, as shown by the growing volume of trade over the years.

India exported goods worth US$ 6.2 billion in 2018 under the GSP, the highest since 1997. However, the GSP’s share in India’s total exports to the US has come down recently after peaking in the mid-2000s.

No other country’s export value under the GSP exceeded India’s in the last two decades cumulatively. The graph shows the export value for the top nine countries under the GSP between 1999 and 2008, and 2009 and 2018. Though India has played down the GSP benefits, some sectors such as apparel, and gems and jewellery are bound to take a hit. The tree map shows the top 25 sectors based on the cumulative export value of goods in the last 20 years under the GSP programme.

No major impact of US GSP withdrawal seen: Textile industry panel
There are 15 products in RMG category under US GSP, which contributes to US$ 586.58 million RMG imports of US. India’s share in the segment is US$ 17.97 million. The most favoured nation (MFN) tariff in 15 products varies from 0.86% to 14.60% in which India gets duty free access with 100% margin of preference. The textile industry has said US withdrawal of preferential trade benefits available to India under the Generalized System of Preferences (GSP) will have no major impact on the sector. “The removal of US GSP on India’s apparel exports will have marginal impact, but we still will be taking up the matter with the Union commerce ministry,” said Sanjay K Jain, chairman, Confederation of Indian Textile Industry (CITI).

It is to be noted that these 15 products contribute only 0.46% of India’s apparel exports, in which bulk of the benefit is concentrated on the product 62044910 (silk woven clothing of women) which comprises 58.5% of India’s total trade under GSP. The figures have been identified on the basis of current trade with the US, and 11 products have negligible impact on India’s apparel exports to the country, Jain pointed out. “Luckily, the GSP preferential items that may lose the status from the US only contributes 0.5% of India’s apparel exports. We are following up with the Centre and hope the status quo is maintained,” he said.

Some of the products eligible for US GSP include gloves, mittens and mitts. Shawls, scarves among other items, not knitted or crocheted, containing 70% or more by weight of silk or silk waste will see moderate impact.

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