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India’s imports from the US declined from $ 25.9 billion to $ 24.6 billion, a 5 per cent decrease. | Photo: Shutterstock
India should accept the withdrawal of benefits under the US generalised system of preferences (GSP) scheme and avoid pushing for its reinstatement as the benefits for domestic exporters were marginal, think tank GTRI said on Monday.
It also suggested that India should not seeks the resumption of the scheme in the upcoming India-US Commercial Dialogue on October 2.
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Commerce and Industry Minister Piyush Goyal is visiting Washington for the dialogue. He will co-chair the meeting with US Secretary of Commerce Gina Raimondo with participation from industries, startups, and SMEs from both countries.
The scheme, it added, is primarily designed for low-income countries, with even major economies like China excluded.
As a growing economic power, India should focus on broader, more strategic trade discussions rather than seeking concessions on relatively insignificant issues, it said.
GTRI Founder Ajay Srivastava said the primary aim of the dialogue is to strengthen the bilateral commercial partnership, boost investment opportunities, and enhance supply chain resilience.
“Given these larger objectives, focusing on reinstating GSP benefits, whose economic impact on India has been minimal, would detract from more significant areas of cooperation. Another important reason is low values of these benefits,” he said.
The GSP program, initiated by the US in 1974, was designed to grant duty-free access to specific products from developing countries, providing them with a competitive edge in the American market.
However, the impact of GSP benefits on India’s overall trade was limited. In 2019, only about 16 per cent of India’s total exports were destined for the US, and less than 2 per cent of these exports benefited from the GSP scheme, he said.
“For every $ 100 worth of Indian goods exported to the US, only 12 per cent entered under the GSP program. Select products from leather, footwear, auto components, and chemicals sectors benefitted, but even in these cases, the advantages were minor compared to the broader scope of India’s trade relationship with the US,” Srivastava said.
He added that at a macro level, the GSP covered less than 1 per cent of the total $ 2.3 trillion in the US imports annually, with the American government foregoing only about $ 1 billion in customs revenue.
India was the largest user of the program, accounting for $ 5.7 billion in exports under GSP, but this figure remains negligible in the context of India’s overall export portfolio and the broader US trade relationship.
“Thus, the GSP’s impact on India’s export growth was limited,” the GTRI said, adding that as a growing global economy, India should pursue strategic agreements and larger negotiations.
The United States is India’s top trading partner, with bilateral trade surpassing $ 190 billion annually, covering a wide range of products and services.
According to the latest data for January to July 2024, India’s merchandise exports to the US grew from $ 44.1 billion in the same period of 2023 to $ 48.2 billion in 2024, reflecting a 9.3 per cent increase.
In contrast, India’s imports from the US declined from $ 25.9 billion to $ 24.6 billion, a 5 per cent decrease.
In 2023, the US key exports to India included petroleum crude ( $ 7 billion), followed by petroleum oil ( $ 6.9 billion). It was followed by LNG exports ( $ 1.4 billion), and coal ( $ 4 billion).
On the other hand, India’s exports to America includes textiles, garments, and madeups topped the list. It was followed by medicines, petroleum oil, machinery, and cut and polished diamonds and smartphones.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
First Published: Sep 30 2024 | 6:02 PM IST
