Indian exporters to the US are hoping for an “early renewal” of the Generalised System of Preferences (GSP) programme. The programme is due for renewal on July 31.
It is designed to support the US manufacturers with cheaper components imports though duty-free entry of 5,000 products from 127 developing countries including India.
Sanjay Budhia, Chairman of the CII’s National Committee on Exports and Imports, said that a timely renewal of GSP was crucial for maintaining the stable bilateral trade between the two countries.
India’s stake in the GSP is high as its exports to the US are largely covered under the programme. It gains an average duty advantage of 6.5 per cent. According to US official data, India derived benefits worth $4.5 billion and topped the 2012 list of GSP beneficiaries.
“At present, all exports under the GSP from India are duty-free in the US,” the industry body executive said.
“US jobs and corporate interests are also linked to the renewal GSP programme,” Budhia pointed out.
Last time, the GSP renewal by the US was delayed about three months.
“Though the time gap had been covered by ‘retrospective effect’ in the administrative action, it had put both US importers and overseas exporters at a disadvantage for some time,” said an industry insider.
US businesses imported $19.9 billion worth of products under the GSP programme in 2012, including many inputs used in US manufacturing.
In the Trade Policy Agenda released, in March, the US administration called for the GSP to be renewed beyond 2015. It said that helping developing countries grow and expand their economies through trade also helps the US by providing its exporters greater opportunity to sell products to billions of new consumers abroad.
“These sales in turn help to grow and support higher-wage jobs at home”, it added.
The US Administration is currently reviewing the issue in consultations with Congress. The growing competitiveness of many emerging market GSP beneficiaries, as well as its impact on the US businesses and consumers are key subjects for examination.
During Congressional consideration for GSP extension in 2009, Senator Grassley, had raised concerns about extending the benefits of GSP to countries like India and Brazil, which were both growing rapidly and presenting obstacles to the progress of the Doha Development Agenda from the US perspective.