India will try to build up export competitiveness in its own right without depending on the Generalized System of Preferences (GSP) scheme provided by the US, said Commerce and Industry Minister Piyush Goyal.
Addressing the media for the first time since taking charge, Goyal said India graciously accepts the fact that development assistance hitherto provided by other nations has stopped.
The scheme provided India tariff-free access to the US market. All benefits have stopped since June 5.
“It’s not something that any of the exporters raised as a matter of life and death. It has had an impact on some sectors, some places...1 per cent, 2 per cent...India is no more an underdeveloped or least developed country that we will look at that kind of support,” said Goyal.
“We also believe that in our development cycle, several countries were giving us support to help us to move out of our problems faster,” Goyal said. But if certain countries have chosen a different path, we will reorient ourselves to be competitive, he added.
The US move had evinced mild reaction from the new dispensation in New Delhi.
In an official release, India had said the American move was ‘unfortunate’ and hinted at further talks on the matter.
New Delhi also pointed out that GSP benefits were ‘unilateral and non-reciprocal in nature extended to developing countries’, and that they couldn’t be used for advancing Washington DC’s trade interests and non-discriminatory benefits.
India is the largest beneficiary nation under the GSP and exported goods worth $6.35 billion under the US’ oldest preferential trade scheme last year.
With regard to products having GSP benefits of 3 per cent or more, exporters might find it difficult to absorb the loss, the Federation of Indian Export Organisations (FIEO) said.
Despite having a minimal impact on India’s overall outbound trade with the US, specific exports from India in a diverse set of sectors such as jewellery, leather, pharmaceuticals, chemicals, and agricultural products are set to face higher costs and competition, the FIEO said.
India’s total benefits from GSP tariff exemptions amounted to $260 million in 2018, according to the data from the Office of the United States Trade Representative. However, this was only a small portion of India’s overall exports to the US in the same period, which stood at $51.4 billion.
Considering this, some senior policymakers in the government have advised against pushing the GSP issue further with the US, sources said. However, traders have pointed out that Indian exports remained under pressure due to increasing competition from low-cost rivals, and that surrendering GSP claims would mean handing away market share.