By admin       2019-06-04

Most Indian industry associations do not foresee any substantial impact on the country’s exports. Though only 12 per cent of India's total exports to the US benefits from GSP, the US decision could do away with all the gains India derived from the US-China trade war, according to Ajay Sahai, director-general of the Federation of Indian Export Organisations (FIEO) under the Indian commerce ministry. Sahai felt that the decision will indirectly benefit China. The imposition of punitive tariffs by the US on China had put India at an advantage, which will be lost now, he said.Of the 1,921 tariff lines that come under GSP, 150–200 tariff lines will get adversely affected—categories that could see profit margins being totally eroded once the GSP benefit is over and will need government duty concessions to sustain their US exports, according to FIEO, which feels the decision will also hit the import diversification strategy of the US, which is keen to replace China as the main supplier to other developing countries.FIEO has also said that as India is predominantly exporting intermediate and semi-manufactured goods to the US under GSP, that has helped in cost effectiveness and price competitiveness of the US downstream industry. Imitation jewellery, leather articles (other than footwear), pharmaceuticals and surgical instruments, chemical and plastics, and agriculture are among sectors that are likely to be worst affected by the withdrawal.FIEO has suggested that the sectors worst hit by the decision be extended benefits under the Rebate of State & Central Tax Levies Scheme (RoSCTL) to provide some compensation.As about 0.5 per cent of India’s apparel exports to the US will stop enjoying GSP benefits, the impact on the sector will be marginal, said Sanjay K Jain, chairman of the Confederation of Indian Textile Industry (CITI). Fifteen varieties of readymade garments covered under the scheme contribute 0.46 per cent of India’s apparel exports and woven silk garments for women constitute more than half of that (58.5 per cent), thereby making such garments the only main item to be affected, CITI feels.Denying any major impact because of the decision, Raja Shanmugam, president of Tiruppur Exporters’ Association (TEA) said in March that the move seems to be a knee-jerk reaction to support major online/e-commerce players. Confederation of Indian Industry (CII) president Vikram Kirloskar said the US decision was taken in “haste,” and would hurt both US firms and Indian companies, especially domestic small-item exporters. GSP boosts the competitiveness of US manufacturers by lowering their cost as about two-thirds of US imports under GSP are raw materials or components, according to Kirloskar, who said the scheme also helps US consumers by eliminating duties on a variety of expensive consumer goods offering tangible benefits.This move is estimated to impose an additional annual burden of $290 million on US items exported to India, said Trade Promotion Council of India (TPCI) chairman Mohit Singla. The US decision is only going to inject the estimated, additional burden of $190 million, which is minuscule compared to India’s overall export to United States, he added.

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