The government is reportedly considering ways to enhance support to sectors impacted by the US government's decision to end the preferential trade status to India. The statuspermitted duty-free exports of over 3,000 items from the country.
The Commerce and Industry Minister Piyush Goyal who recently assumed charge of the ministry has been convening back to back meetings with officials on critical issues over the weekend. He is also expected to hold talks regarding the ways to cushion the export sector following the US decision to withdraw the Generalised System of Preferences (GSP) scheme, a government official told the Hindu BusinessLine.
"The loss suffered by India due to the withdrawal of the GSP scheme will not be huge, but there are specific sectors which will take a hit. These sectors need some hand-holding," the official added.
The sectors such as imitation jewellery, leather articles (other than footwear), chemicals & plastics, agriculture, pharmaceuticals and surgical instruments could be the worst affected by the US' decision, according to the Federation of Indian Export Organisations (FIEO).
The trade promotion body has also suggested that the affected sectors be given benefits under the Rebate of State & Central Tax Levies Scheme (RoSCTL).
US President Donald Trump terminated India's designation as a beneficiary developing nation under the key GSP (Generalised System of Preference) trade programme, with effect from June 5. The White House in a statement said India had not assured the United States that it would provide "equitable and reasonable access" to its markets, which was why the Trump administration had taken the action.
The US government had notified India on March 4, 2019, of its intent to terminate the country's designation. The 60-day notice period ended on May 3. "I have determined that India has not assured the US that it will provide equitable and reasonable access to its markets. Accordingly, it is appropriate to terminate India's designation as a beneficiary developing country effective June 5, 2019," Trump said. Notably, the decision would put additional tariffs burden of over $300 million on the American businesses every year.
The government had responded to the US action, saying India, as part of bilateral trade discussions, had offered resolution on significant US requests to find a mutually acceptable solution but to no avail. "India, like the US and other nations, will always uphold its national interest in these matters," a statement by the Ministry of Commerce said.
India was the largest beneficiary of the programme in 2017 with $5.6 billion worth of exports to the US being given duty-free status, according to a Congressional Research Service report issued in January.