Prelims Level
Mains Level

Why in News?

  • U.S. President Donald Trump issued a proclamation ending the trade benefits effective
    June 5.
  • India’s termination from GSP follows its failure to provide the United States with
    assurances that it will provide equitable and reasonable access to its markets in numerous
    sectors.

What is GSP programme?

  • The GSP, the largest and oldest US trade preference programme, allows duty-free entry
    for over 3,000 products from designated beneficiary countries. It was instituted on January
    1, 1976, and authorised under the US Trade Act of 1974.
  • India has been the biggest beneficiary of the GSP regime and accounted for over a quarter
    of the goods that got duty-free access into the US in 2017.
  • Exports to the US from India under GSP — at $5.58 billion — were over 12% of India’s
    total goods exports of $45.2 billion to the US that year. The US goods trade deficit with
    India was $22.9 billion in 2017.

Possible impact:

  • India’s Department of Commerce feels the impact is “minimal”, given that Indian
    exporters were only receiving duty-free benefits of $190 million on the country’s overall
    GSP-related trade of $5.6 billion.
  • Some experts feel the move will not have a major impact on India also because it has been
    diversifying its market in the Latin American and the African region and its trade with
    countries of the Global South has also been expanding at a “very competitive pace”.
  • At the same time, the move could hit Indian exporters if it gives an edge to competitors in
    its top export categories to the US. The amount of price advantage India has versus
    competitor countries and what happens to their GSP privileges will determine the extent
    to which India’s exports will be impacted
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