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With the US renewing generalised system of preferences (GSP) benefits on retrospective basis from July 29, India's merchandise exports can see a 10 per cent jump in the present fiscal of 2015-2016.
Of the total exports of $310.57 billion in 2014-2015, US accounted for $42.44 billion. Under the US GSP, 3,500 product lines will be eligible for the benefits. Some of the main ones in these are engineering goods (mechanical machinery, electrical machinery and equipment, tools, agricultural implements), organic and inorganic chemicals, plastic and copper, among others.
"In some of the sectors the GSP benefit is as high as 10-11 per cent. Keeping in mind the sectors that have been covered under the US GSP review this time, we expected total exports to go up by 10 per cent this fiscal," said Ajay Sahai, CEO, Federation of Indian Export Organisation (FIEO).
Export of engineering goods, which constitutes 24 per cent of the country's total exports and US being its biggest market, is expected to jump by 15-20 per cent. The average duty on engineering imports in the US ranges from three to four per cent. "Our exports meant for the US markets are now going to go up by 15-20 per cent on annual basis due to this as we are now expecting a quantitative jump. This will also help in gaining the competitiveness that Indian exporters lost," said Sanjay Budhia, managing director of Kolkata-based Patton International Ltd, engaged in exporting steel stampings, locknuts and other fittings to the US.
Budhia, who is also chairman of Confederation of Indian Industry's (CII) National Committee on Exports and Imports, said that the move was long due and delay in renewing the benefits has had an adverse impact on engineering exports. "This renewal has been effected at a very crucial time for India, when exports have dipped for the seventh consecutive month. One of the major reasons for this decline is a slowdown of demand in the US, which has been India's traditional export market. The renewal of GSP will help pick up demand by the US firms, and help Indian exporters regain some of the lost ground," said Chandrajit Bannerjee of CII.
According to the Engineer-ing Export Promotion Council (EEPC) engineering exports might see a turnaround from the second quarter itself. In the first quarter of the financial year, engineering exports stood at $15 billion, out of which $1.7 billion accounted for the US. Chemical exports are also likely to see a rise as it will experience a cost saving of two to eight per cent in the US.
"It will have a positive impact but it is difficult to quantify because we have seen a decline due to duty barrier, weak demand and volatility in crude prices and currency. But I am definite that chemical sector might see a double digit growth in this financial year," said B R Gaikwad, chairman, Chemical Export Promotion Council (CHEMEXCIL).
The US GSP, which expired in July 2013, has been extended with retrospective effect from August 2013 till December 2017.
PREFERENTIAL TARIFF
There are 3,500 products getting duty-free access to the US market
Top 10 tariff lines having maximum GSP benefits on its products
- Mechanical machinery, appliances; parts thereof
- Organic chemicals
- Electrical machinery and equipment and parts thereof
- Plastics and articles thereof
- Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments
- Inorganic chemicals; organic or inorganic compounds of precious metals
- Edible vegetables and certain roots and tubers
- Tools, implements, cutlery, spoons and forks of base metal
- Preparations of vegetables, fruits, nuts or other plant parts
- Copper and articles thereof
Products not eligible for GSP benefits
- Apparel
- Watches
- Footwear
- Work gloves, and leather apparel
- Steel
- Glass
- Electronic articles
- Import-sensitive products declared by the US
