No Significant Impact on Foreign Trade

 

 

The impact of US terminating Generalised System of Preferences (GSP) Scheme will vary across Indian products depending on the individual product concessions.

The concessions constitute the average tariff concession of 3.8% of the value of the India’s export to the US availing GSP benefits, and other factors specific to each product, said Commerce and Industry Minister Piyush Goyal in an update to Rajya Sabha on 21 June 2019.

The US terminated GSP on Indian products from 5 June 2019.

India exported goods worth of US$6.3 billion (as per USTR data) to US under the GSP programme during the calendar year 2018, which was 12.1% of India’s total export to US in that year.

The total duty concessions accruing on account of GSP were US$240 million in 2018 which was about 3.8% of the value of India’s exports to the US availing GSP benefits in 2018.

Issues related to dairy products and medical devices were part of the GSP review instituted by the US, which led to the above outcome, he said.

These concessions will no longer be available.

“Indian industry is competitive in their export products and we do not foresee significant impact on our foreign trade,” Goyal assured the house.

Trade related issues are a part of any ongoing economic relationship and will continue to be discussed and addressed as a part of the regular bilateral trade engagement between India the US.

Meanwhile, the US has imposed additional tariff of 25% and 10% on Steel and Aluminium, respectively, on a global basis.

While India’s steel export in the affected lines to US declined by 35% during the FY 2018-19 compared to FY 2017-18, aluminium export in the affected lines have increased by 14% during the same period.

India has been engaged with US on this issue, as part of the ongoing bilateral trade dialogue, said Goyal in a written reply to the house.

India’s exports have faced a very challenging period in recent years, on account of developments arising from the global financial crisis of 2008-09, which accentuated after 2013-14, when the world economy experienced a major trade slowdown.

Thus, after achieving a turnaround from the initial shock, exports came under immense pressure again in the post 2013-14 period due to accentuation of the global economic and financial crisis in the second phase when countries like China also got adversely affected.

However, since then exports have been growing on a secular basis since 2016-17 for almost three years and total exports reached a new peak of more than half a trillion dollars, for the first time.

A new Foreign Trade Policy (FTP) 2015-20 was launched on 1 April 2015.

The policy, inter alia, rationalised the earlier export promotion schemes and introduced two new schemes, namely Merchandise Exports from India Scheme (MEIS) for improving export of goods and ‘Services Exports from India Scheme (SEIS)’ for increasing exports of services.

Duty credit scrips issued under these schemes were made fully transferable.

The Mid-term Review of the FTP 2015-20 was undertaken on 5 December 2017.

Incentive rates for labour intensive/MSME sectors were increased by 2% with a financial implication of Rs.8,450 crore per year.
A new Logistics Division was created in the Department of Commerce to coordinate integrated development of the logistics sector.

India’s rankin World Bank’s Logistics Performance Index moved up from 54 in 2014 to 44 in 2018.

Interest Equalization Scheme on pre and post shipment rupee export credit was introduced from 1 April 2015 providing interest equalisation at 3% for labour intensive MSME sectors.

The rate was increased to 5% for MSME sectors with effect from 2 November 2018 and merchant exporters were covered under the scheme with effect from 2 January 2019.

Various measures for improving ease of doing business were taken.

India’s rank in World Bank ‘Ease of doing business’ ranking improved from 142 in 2014 to 77 in 2018 with the rank in ‘trading across borders’ moving up from 122 to 80.

A new scheme called “Trade Infrastructure for Export Scheme (TIES)” was launched with effect from 1 April 2017 to address the export infrastructure gaps in the country.

A comprehensive “Agriculture Export Policy” was launched on 6 December 2018 with an aim to double farmers’ income by 2022 and provide an impetus to agricultural exports, Goyal informed the house.

A new scheme called “Transport and Marketing Assistance” (TMA) scheme has been launched for mitigating disadvantage of higher cost of transportation for export of specified agriculture products.

A new scheme called Scheme for Rebate of State and Central Taxes and Levies (RoSCTL) covering export of garments and made-ups was notified on 7 March 2019 providing refund of duties/taxes at higher rates, he said. fiinews.com