India Development News & Foreign Investment Opportunities

US withdraws GSP on Indian Exports

Issue part of regular process


Issue part of regular process




The United States of America (USA) has withdrawn India’s benefits under the Generalized System of Preferences (GSP), a scheme under which India exported US$6.35 billion worth of goods last year.

The move is unilateral, non-reciprocal and non-discriminatory benefits extended by some developed countries to developing countries, said Ministry of Commerce and Industry in a release on 1 June 2019.

India as part of its bilateral trade discussions, had offered resolution on significant US requests in an effort to find a mutually acceptable way forward. But unfortunate that this did not find acceptance by the US.

India, like the US and other nations shall always uphold its national interest in these matters, said the Ministry.

“We have significant development imperatives and concerns and our people also aspire for better standards of living. This will remain the guiding factor in the Government’s approach,” said the Ministry.

In any relationship, in particular in the area of economic ties, there are ongoing issues which get resolved mutually from time to time.

“We view this issue as a part of this regular process and will continue to build on our strong ties with the US, both economic and people-to-people.

“We are confident that the two Nations will continue to work together intensively for further growing these ties in a mutually beneficial manner,” said the Ministry.

Reacting to the news of US withdrawal of GSP benefits to India, Ganesh Kumar Gupta, President, FIEO, said that India’s exports to the US during 2018 were US$51.4 billion. But out of US$6.35 billion value of exports from India to US under the GSP scheme, net benefit to the tune of only US$260 million were accrued by the Indian exporters. Thus at macro level the impact of GSP withdrawal on our exports to US would be minimal.

However, in respect of products having GSP benefits of 3% or more, exporters may find it difficult to absorb the GSP loss.

Most affected sectors would be: (I) Imitation jewellery (average GSP benefit 6.9%), (II) Leather Articles (other than footwear) (average GSP benefit 6.1%), (III) Pharmaceuticals & Surgical (average GSP benefit 5.9%), (IV) Chemical & Plastics (average GSP benefit 4.8%) and (V) Agriculture: Basic & Processed (average GSP benefit 4.8%), said FIEO President.

Gupta said that GSP withdrawal would also affect US manufacturers, who benefitted from it on imports of parts and components, as well as US consumers.

It will also indirectly benefit China. In the first two months of 2019, GSP imports from India are up significantly for products on the Section 301 lists, but down for products where China does not face new tariffs.For India, 97 per cent of increased 2019 GSP imports are on the China Section 301 lists. GSP imports on Section 301 lists increased by 18 %, while imports of everything else increased by just 2%. This makes a very strong case for extension of GSP benefits for India, observed FIEO Chief.

Gupta said that Government should provide some supports to products where GSP loss has been significant so that the market is not lost. He favoured extension of Rebate of State & Central Tax Levies Scheme (RoSCTL) on such products on exports to US.

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