NEW DELHI: After a series of marathon meetings over the weekend to work out India’s response to the US decision to end preferential tariff for a host of Indian exports, the Central government is planning to engage the US in talks over tariff rates and market access issues the US is interested in, besides coming up with a package to support those industries that are likely to be hit the most.
Top Commerce Ministry officials said India would work on its responses and offers on tariffs on a variety of products the US was interested in, which includes automobiles, mobile phones and other high-value infotech products, besides changes in rules to allow US agricultural and food products greater entry in the Indian market.
A support package is also in the works for sectors such as pharmaceuticals, leather products, chemicals, plastics, imitation jewellery, farm products and processed food, which are likely to be hit by the withdrawal of GSP benefits.US President Donald Trump has ordered termination of India’s designation as a developing nation from June 5, under a trade programme called the Generalised System of Preferences (GSP), which allowed India to export certain categories of products without paying any customs duty.
Officials said that certain rebates and interest subsidies were being looked at as a way of keeping the sectors likely to be hit by GSP withdrawal competitive. “If we do not give them support, then we may lose the US market for these products to competing Asian rivals such as Vietnam and China,” said officials. India exported goods worth $6.35 billion in 2018 under the GSP scheme.
However, only those goods where the normal chargeable duty is over 3 per cent are likely to be hit.“Our calculation is that a duty of up to 3 per cent can be absorbed by the manufacturer and prices can remain where they are. The higher the duty, the less competitive our products become in the US market,” said officials.
Customs duty
Federation of Indian Export Organisations calculates that the US customs duty on will be 6.9 per cent on imitation jewellery, 6.1 per cent on leather goods, 5.9 per cent on pharma-ceuticals and 4.8 per cent on chemicals and plastics.
Other avenues
The Centre will also look at other avenues to increase exports both in India’s traditional markets in the US, Europe and West Asia as well as other markets such as Africa and Latin America