‘Taking away GSP may not hit exports much’

Overall impact less than 0.4%: FIEO

The Trump administration’s decision to withdraw trade concessions to India under the Generalised System of Preferences (GSP) could have significant impact on individual sectors, even though the overall impact will amount to less than 0.4% of India’s exports to the U.S., Federation of Indian Export Organisations (FIEO) has said.

“India’s exports to the U.S. stood at $50.57 billion in 2017 with a GSP tariff advantage of only $190 million, which was less than 0.4% of our exports,” Ajay Sahai, director general and CEO of FIEO told The Hindu . “So, the withdrawal will have marginal impact.”

The export body said India was getting a tariff preference on 5,111 tariff lines out of a total 18,770 tariff lines, in the U.S. Within this, the tariff advantage was more than 4% in 2,165 tariff lines.

Absorbing duty loss

“While exporters should be able to absorb the duty loss where it is 2-3%, the government should look into providing fiscal support to those products where GSP tariff advantage was significant, particularly in the labour-intensive sectors,” Mr. Sahai added. “This will allow them to maintain their landed prices at more or less the same level as under the GSP regime.”

According to FIEO, the sectors that will likely be significantly impacted will include processed foods, leather products other than footwear and engineering goods such as spark ignition, turbines and pipes.

The export body also pointed out that the withdrawal of GSP benefits to Indian exporters will also impact the downstream industries in the U.S. that were using the cheaper inputs from India.

The U.S.’ move would have significant impact on leather travel goods, said P.R. Aqeel Ahmed, chairman, Council for Leather Exports. The $800-million travel goods sector till now enjoyed 0% duty.

Asked how they would face it, he said it would not take effect for at least two months after notification to the Congress and the Indian Government. “We will take it up with the Centre to request the U.S. not to withdraw the GSP,” he said.

The textiles sector may not see significant impact as only a few products are covered under the GSP.

A. Sakthivel, vice-chairman, Apparel Export Promotion Council, said there are 15 ready-made garment products under the GSP that account for $17 million of annual imports by the U.S. from India.

“We are taking up the issue with Ministry of Commerce to continue to provide the GSP benefit to India. This will raise the product cost for buyers by almost 7%. China is the main competitor in these categories and India will not be able to match the cost.”

(With inputs from Preetha Soundariya, N. Anand)

Total GSP benefits amount to about $190 million on exports of $5.6 billion [that fall under the GSP]Anup WadhawanCommerce Secretary

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