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India will ask the US for speedy renewal of the generalised system of preferences scheme (GSP) — the preferential import tax scheme that allows market access at nil or low duties for about 3,500 Indian products, including chemicals and textiles.
The scheme was not renewed for India by Washington in April as the US Trade Representative’s office said that it wanted to hold an eligibility review.
Commerce and Industry Minister Suresh Prabhu, who will be in Washington later this month, is likely to point out that extension of the GSP scheme should not be linked to India’s policy on pricing of medical devices or the dairy industry since the US had been unilaterally offering the concession to help labour intensive sectors so far.
“There is no reason why India should not be considered eligible for the GSP scheme as it has not taken any measure that could negatively affect bilateral trade between the countries,” a government official told BusinessLine .
Though the US Congress had voted to extend the GSP scheme through 2020, it was not done so for India, Indonesia and Kazakhstan. The USTR said it was launching a self-initiated GSP eligibility review of India based on concerns related to its compliance with the GSP market access criterion and was also accepting two petitions related to the same criterion.
The US dairy and medical device industries had filed petitions pointing out trade barriers in India and had requested a review of India’s GSP benefits.
Pricing caps on medical devices is an issue which the USTR’s office also wants to discuss separately with Prabhu as the medical devices industry in the US is unhappy with recent caps imposed on products such as stents.
“We have to explain to the US that decisions on pricing caps are taken by an independent national pharmaceuticals pricing authority and it is not possible for the Commerce Minister to give a guarantee on the issue,” the official said.
India is one of the biggest beneficiaries of the GSP scheme, which was introduced by the US in 1976. As per figures furnished by the USTR, imports from India in 2017 under the GSP scheme was to the tune of $5.6 billion, which was a fourth of total imports under GSP at $21.2 billion.
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