Exporters have urged the government to extend incentives for items that will be affected most by the withdrawal of the Generalised System of Preferences (GSP) scheme by the US such as leather, pharmaceuticals, agriculture and chemicals.

The effect of the withdrawal of the scheme, at the macro level, is likely to be minimal as net benefit to exporters under the scheme was just $260 million annually, but the export competitiveness of some products, benefiting the most from the scheme, was expected to get hit.

“In respect of products getting GSP benefits of 3 per cent or more, exporters may find it difficult to absorb the loss. Imitation jewellery, leather articles (other than footwear), pharmaceuticals & surgical, chemical & plastics and agriculture are some items to be worst affected by the withdrawal,” according to Ganesh Kumar Gupta, President, Fieo.

US President Donald Trump signed a proclamation on Friday stating that the GSP scheme, which offered duty-free access to over 3,000 items exported from India, will be withdrawn for the country from June 5. The decision was taken due to the US government’s belief that India was not providing equitable market access to American products.

Reacting to the development, Congress party spokesperson Randeep Singh Surjewala said that the decision to withdraw the scheme was notified to India on March 4, 2019, but the government did nothing to pre-empt it. “The most serious implication would be for sectors like agriculture, auto parts, and pharmaceuticals, which are already facing serious crisis. In future, we could see many more industries including services industry, which has more than $ 28 billion of exports to the US, being affected significantly,” an official release of the Congress party stated.

Fieo proposed that the government could extend benefits under the Rebate of State & Central Tax Levies Scheme (RoSCTL) scheme on products affected by GSP withdrawal.

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