NEW DELHI: There is more bad news for Indian exporters with the preferential access to the US, known as generalized system of preferences (GSP), set to expire at the month-end.
Expiry of the benefits are expected to hit small scale and labour-intensive industries the most, prompting commerce and industry minister Anand Sharma to once again take up the issue when he meets US trade representative Mike Froman later this week. But given Froman's strong stance against imports from emerging market economies such as India and China, an extension is not going to come easily, said officials.
Even before he was nominated for the trade negotiator's job, Froman had taken a strong anti-India stance on the WTO trade talks and blamed India for blocking negotiations on issues such as trade facilitation.
In any case, Indian officials see growing signs of protectionism in the US, as manifested in the visa restrictions and attacks over the labour regime. Besides, the US is exerting pressure on India over its intellectual property regime, although New Delhi has maintained that steps such as patent waiver in public interest and checks on unwarranted patents are in line with the legal provisions and Trips. Besides, India is often blamed by the US for initiating "protectionist measures" such as local procurement for solar energy and telecom equipment.
The US is expected to use extension of GSP benefits to get India to address some of its concerns amid a growing clamour for canceling the sops that were started in 1976. On June 18, 14 US business groups launched "the Alliance for Fair Trade with India" that called upon the US government and Congress to press India on issues of concern to them. Companies such as IBM have advocated linking these issues to GSP benefits.
What is GSP?
The scheme provides preferential duty-free treatment for over 3,500 products from 127 developing & poor countries
Goods such as textiles and apparel, watches, footwear, handbags, luggage, flat goods, work gloves and leather apparel are not entitled for GSP treatment. No sops are given for import of sensitive steel, glass and electronics
The benefit is reviewed annually, programme lapsed in 2010
It was reauthorized in Oct 2011 and the current congressional authorisation expires on July 31, 2013
In 2011, India was the second largest beneficiary
Times View
The government needs to take immediate steps to make Indian industry, including the small scale sector, more competitive so that it does not have to lobby for getting preferential access for Indian exports. The emphasis should be on supplying uninterrupted power and better road, rail and port connectivity so that Indian companies are not burdened with a high cost of operations. At the same time, transaction costs need to be reduced and industry should be freed from bureaucratic red tape. For a country which is pitching hard for a place on the global high table, nothing can be more embarrassing than finding itself in a situation in which it is lobbying for concessions meant to go to the poor and least developed countries.
Source:-timesofindia.indiatimes.com
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