Exports to US goes up after withdrawal of benefits.
Chennai: Though the government is reportedly pushing the US administration for resumption of export benefits to domestic products under the US Generalised System of Preferences (GSP), the export sector is not too keen on having the benefits, withdrawn by the US last June.
Exporters rather look forward for positive steps towards a free trade agreement and tariff reduction on steel and aluminium exports. Though a full-fledged trade deal between India and the US looks unlikely now, with Trump himself saying on Tuesday that “I'm really saving the big deal for later on”, exporters are pinning their hopes on a likely ‘trade package’ during Trump’s India visit on February 24 and 25.
Commerce minister Piyush Goyal reportedly had several rounds of talks with US trade representative Robert Lighthizer over phone, demanding exemption from high duties imposed by the US on certain steel and aluminium products, resumption of export benefits to certain domestic products under the GSP, and greater market access for products in sectors like agriculture, automobile, auto components and engineering.
It is not known what all are left on the table for inclusion in the trade package.
As a developing country, India has been enjoying the benefits under US GSP programme since 1975. As part of the trade war that Trump has opened on multiple fronts, the US withdrew $260 million benefits to Indian products under GSP. While the export community was worried about the impact of the withdrawal in June, they are not pushing for its restoration during the upcoming Trump visit.
“Though the GSP benefits were withdrawn in June, the Indian exports to the US have grown in the second half of 2019 against the same period in 2018. Though there are a few export segments that have been hit by the GSP, overall there has not been any major impact of GSP on Indian exports to the US,” said Ajay Sahai, director general and CEO of the Federation of Indian Export Organisations.
According to him, India should pursue a free trade agreement or a preferential trade agreement with the US that will be beneficial for traditional export sectors like textiles and leather, especially at a time when there is a standoff between the US and China.
“Even if we do not sign a deal during the visit, we should have a meaningful interaction to bridge the gap,’ added Sahai.
Indian exporters hope to see some reduction in tariffs on steel and aluminum, which were hiked in March 2018. The Trump administration had imposed tariffs of 25 per cent on $761 million of steel and of 10 per cent on $382 million of aluminum imported from India.
“The 10 per cent tariff on aluminum imports did not affect us much, but our steel exports suffered by the 25 per cent tariffs. We look forward for some reduction in these tariffs,” said Sahai.