India To Seek Us Preferential Duty Scheme Extension

India is likely to seek extension of the generalised system of preferences (GSP) scheme under which the United States allows import of agricultural and industrial goods from the country at a concessional rate of duty. The tenure of the current scheme ends on May 31.

Commerce ministry officials say the scheme may be automatically extended after the US Congress reaches a decision. However, in case it is not extended automatically, India will seek renewal.

The GSP scheme helps exporters who supply a large number and quantity of goods to the US as it implies lower duties on several products and makes them price-competitive. According to commerce ministry estimates, about 20 per cent of the countrys exports to the US are covered by the GSP scheme.

 

Extension of the scheme is expected to augment trade between the two countries. The balance of trade in 1995-96 was $1.69 billion in Indias favour, down from $2.1 billion in 1994-95. The fall reflects a higher growth of imports as compared to exports. In 1995-96, bilateral trade with the US stood at $9.35 billion, with exports at $5.5 billion and imports at $3.8 billion. This marks a growth of 17.22 per cent over 1994-95. The full figures for 1996-97 are not yet available.

The GSP scheme, which applies to several developing countries, has been terminated for some countries. Guatemala, Pakistan and Thailand have, in the past, been under GSP review over the issue of workers rights. Pakistan had $40 million in GSP benefits removed retroactively to July 1, 1996, from articles produced with child labour, such as, sports goods, surgical instruments and handmade rugs. GSP has also been suspended due to lack of intellectual property rights protection.

The rules for termination of the GSP scheme cover degrading practices including slavery, forced labour as well as significant shortcomings in action to control drug trafficking and money laundering.