India says GSP withdrawal by US won’t hit exports

The United States today gave a 60-day withdrawal notice to India on the Generalised System of Preferences (GSP) benefits extended by it.

India exports goods worth $5.6 billion under the GSP, and the duty benefit under the preferential system is only $190 million annually, according to commerce secretary Anup Wadhawan.

India mainly exports raw materials and intermediate goods such as organic chemicals to the US, he said, adding, "GSP withdrawal will not have a significant impact on India's exports to the US."

The US had initiated the review on the GSP scheme following representations by the US medical devices and dairy industries, but subsequently included numerous other issues on a self-initiated basis. These include issues related to market access for various agriculture and animal husbandry products, relaxation / easing of procedures related to issues like telecom testing / conformity assessment and tariff reduction on ICT products.  

The commerce ministry said the Department of Commerce has been engaging various government departments concerned with these issues, and was able to offer a very meaningful way forward on almost all the US requests. However, in a few instances, specific US requests were not found reasonable and doable at this time by the departments concerned, in light of public welfare in relation to India's developing country status and in its national interest, it added.

On the issue of medical devises, India had offered to put in place suitable trade margin within a reasonable time frame to address US concerns regarding profitability of its medical devices exports. This has been proposed taking into consideration concerns about fair pricing for the consumers and adequate remuneration for the suppliers. 

On the issue of dairy market access, India has clarified that the certification requirement, that the source animal had never been fed animal derived blood meal is non-negotiable given the cultural and religious sentiment, the requested simplified dairy certification procedure, without diluting this requirement, could be considered. Acceptability of US market access requests related to products like alfalfa hay, cherries and pork was conveyed. 

On reduction of IT duties, India had pointed out that its duties are moderate and not import obstructing. Any MFN duty reduction would almost entirely benefit third countries. Accordingly, India conveyed willingness to extend duty concessions on specific items in which there is a clear US interest. 

On telecom testing, India was willing to consider discussions for a Mutual Recognition Agreement.

Due to various initiatives resulting in enhanced purchase of US goods like oil and natural gas and coal the US trade deficit with India has substantially reduced in calendar years 2017 and 2018. The reduction is estimated to be over $4 billion in 2018, with further reduction expected in future years on account of factors like the growing demand for energy and civilian aircrafts in India. This reduction has happened in the face of a rising overall US trade deficit, including with some other major economies. India is also a thriving market for US services and e-commerce companies like Amazon, Uber, Google and Facebook with billions of dollars of revenue, the commerce department pointed out.   

The issue of Indian tariffs being high has been raised from time to time. It is pertinent to note that India’s tariffs are within its bound rates under WTO commitments, and are on the average well below these bound rates. India’s trade weighted average tariff is 7.6 per cent, which is comparable with the most open developing economies, and some developed economies. On developmental considerations there may be a few tariff peaks, which is true for almost all economies, it added.

Further, it said, India was agreeable to a very meaningful mutually acceptable package on the above lines to be agreed to at this time, while keeping remaining issues under discussion in the future.