With the US withdrawing GSP benefits, the engineering sector in India seems to be in a tight spot as its exports to the western country under the programme account for about 44 per cent of the total annual duty benefits of USD 5.6 billion, an expert has said. In 2018-19 fiscal, the engineering exports to the Land of Liberty stood at USD 331 billion. Of the total annual benefit of USD 5.6 billion India had been receiving from the US, the value of GSP benefit for engineering exports account for USD 2.5 billion, Rakesh Shah, the former chairman of Engineering Export Promotion Council of India (EEPC India), said on Sunday. While high-end engineering exporters will have to take a hit of 2-3 per cent margin, the low-value products, which constitute 40 per cent of the sectors' total value, may find it difficult to survive, if the matter is not sorted in the next two-four months, he maintained.
The exporters’ fraternity is pinning hopes on the newly sworn-in Union Commerce Minister, Piyush Goyal, to find an amicable solution to the trade hurdle, at a time when Indian exporters were gearing up to get a share of Chinese exports in wake of mounting trade tension between the US and the dragon country, Shah said. “It won’t be a major problem if the matter gets sorted out in the next 2-4 months as the exporting units will get to fulfill the existing orders,” the former EEPC chairman said.
The Generalized System of Preference (GSP) is the largest and oldest US trade preference programme, designed to promote economic development by allowing duty-free entry for thousands of products from designated beneficiary countries. Under the programme, nearly 2,000 products including auto components and textile materials can enter the US duty- free if the beneficiary countries meet the eligibility criteria established by Congress. The Centre on Saturday called the development “unfortunate” and said, “India, like the US and other nations, shall always uphold its national interest in these matters.”