India's removal from GSP list of US

Context

The US government through its trade preference programme - Generalised System of Preferences (GSP), aims to promote economic growth in 121 developing countries and territories. Under the GSP programme, countries are eligible for duty free treatment of nearly 5000 products. In the year 2018, USD 23 billion worth of goods were imported under this programme. India was the largest beneficiary with export of USD 6.3 billion followed by Thailand (USD 4.4 billion) and Brazil (USD 2.5 billion).[1]

Relevance & Impact

In the month of May 2019, President Trump revised the list of Beneficiary Developing Countries, making significant changes to the GSP programme by removing India and Turkey from the list. The order for India’s removal was applicable from 5^th June 2019. While Turkey was removed from the list because of the economic growth, India was removed for the lack of assurance that it will provide equitable and reasonable access to its markets. [2]

In January 2018, US government had implemented a safeguard duty on the import of solar cells and modules. Imports from beneficiary developing countries under GSP programme were exempt from this duty. Given that India was a beneficiary country, a significant export surge was observed in the FY 2018-19 (USD 50 million) and FY 2017-18 (USD 39.81 million) compared to USD 5 million in the year FY 2016-17.[3]

Who should care?

• Export oriented Indian manufacturers
• Ministry of New & Renewable Energy, Government of India
• Ministry of Commerce, Government of India