Jewellery exports may be hit

Kolkata: The withdrawal of benefits under the Generalized System of Preferences (GSP) with effect from June 5, as announced by the US earlier, will have limited impact on India's overall export trade. That's what Crisil suggests. The bigger issue, however, is the spectre of trade tightening for India that the move raises, experts feel.

"The withdrawal of GSP will affect exporters of gems & jewellery the most because nearly 15 per cent of such exports availed of its benefits in calendar 2018. Now there will be an additional duty of nearly 7 per cent on exports of precious metal-based and imitation jewellery. That will reduce competitiveness of domestic exporters and put pressure on margins," said Hetal Gandhi, Director, Crisil Research.

The US accounts for over 15 per cent of India's exports of goods, though from a US perspective, imports from India are barely 2 per cent of the pie. The US's trade deficit with India has declined over the past five years, from $31 billion in 2014 to $24.2 billion in 2018. This is because India's exports to the US have logged a CAGR of 6 per cent, while its imports from the US have run up at 11 per cent. In 2018, India's trade with the US came to $142.1 billion, of which, exports were $83.2 billion. Within exports, that under GSP is estimated to be 7.5-7.8 per cent.