Are Indian exports to the U.S. eligible for duty-free entry into the U.S. under the Generalised System of Preferences (GSP)? Exporters appear to be confused on this .
Some say the policy uncertainty and the resultant confusion are leading to a diversion of orders meant for India to neighbouring countries. Under the GSP, the U.S. grants eligible countries duty-free entry into the country for about 4,800 products.
The U.S. is now reviewing whether India is still eligible for GSP benefits, even as the Indian government is maintaining that exporters can still receive the benefits. One of the largest exporter-bodies, however, has said that its members have not been receiving the benefits since December 2017. “From December 2017, we have not been having GSP benefits,” Ajay Sahai, director general and CEO at the Federation of Indian Export Organisations, told The Hindu . “If you look at the GSP benefits that have been granted to India, as a percentage of exports to the U.S., it is not too important. But in some sectors, where there is cut-throat competition, it is certainly affecting our MSME exporters,” he added.
‘Small exporters hit’
“Small exporters are definitely affected in price-sensitive sectors.”
“Even a difference of 4-5% makes a lot of difference in sectors such as carpets, chemicals, some engineering sectors,” he added.
However, the Engineering Export Promotion Council of India has claimed that its members are still availing of the GSP benefits. “So far, GSP benefits has not yet been denied,” Suranjan Gupta, Executive Director at EEPC India, said. “The review is still on. The reports I have is that the exports are still getting GSP benefits. My members told me that as of now their buyers are reporting that the GSP benefits are coming in.”
“Currently, it is hanging in the air [whether] they will extend the waiver or not,” Mr. Gupta added. “There could be diversion of exports to other countries if GSP benefits are withdrawn,” he noted. The government is unequivocal about the issue, however, with the Commerce Ministry stating that Indian exporters are still eligible for GSP benefits.
“Our exports are going on under GSP still,” the Commerce Ministry spokesperson said. “We are still in talks with the U.S. on GSP and no concrete decision has been taken as yet on whether GSP is being withdrawn or has been withdrawn...”
Exporters say the confusion around whether Indian exports are eligible for GSP has meant orders that would otherwise have been given to Indian exporters are now being sent to countries such as Bangladesh, Sri Lanka, and Vietnam.
Having announced its decision to review India’s eligibility under GSP earlier this year, the Office of the United States Trade Representative (USTR) held the first hearing on the issue on June 19. The review process is still on.
The USTR notice said the India review would “focus on whether it is meeting the eligibility criterion that requires a GSP beneficiary-country to assure the [U.S.] that it will provide equitable and reasonable access to its market.” The USTR is “accepting two petitions asserting that India is not meeting this criterion: one from the National Milk Producers Federation and the U.S. Dairy Export Council, and the other from the Advanced Medical Technology Association.”
