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Category: International Trade Sub-category: Export Import Procedures
Document type: news
The US government has been requested to restore duty-free imports from developing economies, including India, on grounds that it generated revenue for the labour-intensive small and medium enterprises. The scheme allowing duty-free imports was stopped in December 2010 when authorization for it was not renewed in the US, following political opposition as well.
According to statistics provided by the US, India was the third largest beneficiary of the scheme, and exported $3.48 billion of goods without import duty to the US in 2010. It contributed to about one-eighth of its exports of $29.6 billion to the country.
The eligible nations for Generalized System of Preferences (GSP), which allows duty-free imports of over 3,000 products, are developing countries with per capita income lower than $12,196. However, certain thresholds are maintained for the beneficiaries on the basis of "competitiveness", which they are not supposed to cross.
Jewellery exports lost the GSP scheme in 2007, when exports touched $2 billion. However, products like handicrafts, carpets, wind-power generators, certain chemicals and motor vehicle parts are still under the purview of the GSP and enjoying its benefits.
Renewal was not given to the GSP, following political objections on extension of the benefit to sleeping bags from Bangladesh, which consists of less than 2% of total sleeping bag imports.
The government is being urged by Indian exporters to pressurize US to complete the matter as early as possible, since beneficiary exporters had started losing their competitive edge, especially against China, which cannot qualify because of it being a communist state.
It is important that the US be convinced to restore the GSP scheme as the US market continued to be the primary market for India's exports. The export promotion council for handicrafts has persuaded the commerce department to uplift the problem, as a number of handicraft items like hand-hooked carpets, and brassware benefited from the scheme and would suffer in the absence of tax sops.
External Links:
US Customs and Border Protection - Official Website
Central Board of Excise and Customs - India - Official Website
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