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US withdrawal of GSP may hit India’s garments exports

US withdrawal of the generalized system of preferences (GSP) could hit India’s garments exports if readymade garments are also targeted, recently a report of Business Standard said this.

US withdrawal of GSP India

According to the Apparel Export Promotion Council (AEPC), the US imports $586.58 million worth of apparel products under 15 categories that presently enjoy GSP. India’s share is $17.97 million.

On the basis of current trade with the US, AEPC has identified that GSP withdrawal on as many as 11 products of the 15 may have an insignificant impact on India’s apparel exports to the US.

The high impact would be on women’s or girls dresses, not knitted or crocheted. The moderate impact will be on shawls, scarves, mufflers, maintillas, veils etc.

India gets duty access with 100% margin of preference in 15 products of the MFN (most favored nation) tariff.

Noted that these 15 products contribute to only 0.46% of India’s apparel exports. The bulk of the benefit is concentrated on Woven silk dresses for women, which make up 58.5% of India’s total trade under GSP.

Rahul Mehta, President of the Clothing Manufacturers Association of India (CMAI) said, “The existing list of products for withdrawal of GPS may not have a major impact on India’s garments exports. But, if the list is expanded to cover India’s readymade garments (RMG) also, then the impact would be big as 30-35% of India’s RMG exports go to the United States.”

Industry experts expressed concern that while the impact would be minimal, under the present circumstances when the exports are already dropping. They have also said manufacturers should compensate the price increase through subsidy or incentives and should learn protectionism from the US.

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