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US GSP withdrawal impact marginal: Indian textile bodies

Mar '19
US GSP withdrawal impact marginal: Indian textile bodies
The US withdrawal of preferential trade benefits to India under the generalized system of preferences (GSP) will not have a major impact on the country’s textile sector, according to Indian textile industry associations. The withdrawal will have marginal impact, said Ganesh Kumar Gupta, president of the Federation of Indian Export Organisations (FIEO).

FIEO was set up by the Indian ministry of commerce.

Despite marginal impact of the decision, the Confederation of Indian Textile Industry (CITI) will take up the matter with the commerce ministry, said its chairman Sanjay K Jain.

“We don’t see any major impact. The move seems to be a knee-jerk reaction to support major online/e-commerce players, who seek to destabalise Indian economy. It is detrimental to India’s free e-commerce policy,” said Raja Shanmugam, president of Tiruppur Exporters’ Association (TEA).

There are 15 products in the readymade garments (RMG) category under US GSP, which contributes to $586.58 million RMG imports of US. India’s share in the segment is $17.97 million. The most favoured nation (MFN) tariff in 15 products varies from 0.86 per cent to 14.60 per cent, in which India gets duty access with cent per cent margin of preference, said Jain.

These 15 items contribute only 0.46 per cent to India’s apparel exports, in which bulk of the benefit is concentrated on silk woven clothing for women, which comprises 58.5 per cent of India’s total trade under GSP.

The figures have been identified on the basis of current trade with the United States, and 11 products have negligible impact on India’s apparel exports to the country, Jain pointed out. The GSP preferential items that may lose the status only contributes 0.5 per cent of India’s apparel exports, he said.

Some of the products eligible for US GSP include gloves, mittens and mitts.

Shawls, scarves among other items, not knitted or crocheted, containing 70 per cent or more by weight of silk or silk waste will see moderate impact.

FIEO also said as India is predominantly exporting intermediate and semi-manufactured goods to the United States under the GSP, the same has helped in cost effectiveness and price competitiveness of US downstream industry.

Therefore, GSP withdrawal will also impact the competitiveness of many manufacturing sectors and will hit the consumers at the same time, it said in a statement. The import price of most of the chemicals products, which constituted a large chunk of India’s exports, is expected to increase by about 5 per cent.

The withdrawal of GSP benefit will also hit the import diversification strategy of United States where it is keen to replace China as the main supplier to other developing countries, FIEO added. (DS)

Fibre2Fashion News Desk – India

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March 2019

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