US extends duty benefits on Indian exports until next govt is formed


The US has finally agreed to extend trade benefits to India under the Generalised System of Preferences (GSP) programme till the formation of a new government in New Delhi and finalisation of a new trade package with it, sources have told.

The decision to not withdraw the GSP benefits from India was informed by the Office of the US Trade Representative (USTR) over the weekend. The deadline to withdraw the GSP benefits was 4 May.

“The GSP review is on hold for now…This is the result of some adroit diplomacy on our part from the Ministry of External Affairs, Commerce, PMO and the Indian mission there (in US),” a top Indian official involved in the talks told.

The official also added that GSP benefits had been extended “long enough for India to revert after elections and engage with the US side”.

According to another official, who did not wish to be named, the Narendra Modi government has assured the US that it would not import oil from Iran in return for the extension of GSP benefits.

Under the GSP programme, which has been in place since 1976, the US grants some Indian exports preferential or duty-free access to American markets. As many as 5,111 Indian products, ranging from textiles to engineering goods, are covered under the GSP, of which India has been using the benefits for 2,167 products.

In March, the Donald Trump administration had declared it was reviewing the GSP benefits offered to Indian exporters for a period of two months, after which it will be done away with. That two-month window expired on 4 May.

India gets GSP benefits worth $5.6 billion out of the $46 billion worth of goods it exports to the US by means of zero or reduced tariffs. It is given mostly to labour-intensive sectors like leather, jewellery and engineering, among others. Withdrawing the GSP benefits would have had an impact on jobs.

India currently enjoys a trade surplus of $21.27 billion with the US, according to the 2017-18 data from the Ministry of Commerce and Industry.