In 2018, India exported goods worth of $6.3 billion (as per USTR figures) to the US under the GSP, which was around 12.1 per cent of India’s total export to the US. The average duty concessions accruing on account of GSP were almost $240 million in 2018, which was about 3.8 per cent of India’s exports to the US availing the GSP benefits. The impact varies across products, depending on the individual product level concessions which were availed under the GSP.
Under the GSP, certain products can enter the US duty-free if beneficiary developing countries meet the eligibility criteria established by their Congress. GSP criteria include, among others, respecting arbitral awards in favour of American citizens or corporations, combating child labour, respecting internationally recognized worker rights, providing adequate and effective intellectual property protection, and providing the US with equitable and reasonable market access. Countries can also be graduated from the GSP program depending on factors related to their economic development.
The US launched an eligibility review of India’s compliance with the GSP market access criterion in April 2018. The petitions filed by the US dairy and the medical devices industry were also included in this review, which alleged that Indian trade barriers affected American exports in these sectors.
“During the process of GSP review, USTR added various demands including greater market access for a number of its products and used the non-reciprocal GSP benefit as a lever to extract further concessions from India,” Goyal said.
Though India took its best efforts to arrive at a mutually beneficial trade package, the US review culminated in issuance of withdrawal notice by the US on March 4, 2019 and GSP benefits was withdrawn with effect from June 5.
The US indicated that it withdrew the GSP for India under Section 502 of its Trade Act of 1974 citing that India did not provide equitable and reasonable access to its markets in numerous sectors.
In a separate reply, Goyal said the government is in favour of a stable export policy for the farm products and the decision to impose export restrictions on a farm product is based on a number of factors such as domestic supply and price position, concerns of food security, need to balance between remunerative prices to the growers and availability of agricultural products to at affordable prices.
Among the major agricultural products, restrictions exist on export of mustard oil, which is allowed to be exported only in branded consumer packs of up to 5 Kg subject to a Minimum Export Price of USD 900 per MT. The export of onions has been prohibited with effect from September 29. In addition, the export of a number of seed varieties is restricted.