The US President Donald Trump decision to withdraw duty benefits on Indian products under the Generalized System of Preferences (GSP) programme may have negative impact on textile exports from the country.
“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 per cent of India’s RMG exports go to the United States,” said Rahul Mehta, President of the Clothing Manufacturers Association of India (CMAI).
According to the Apparel Export Promotion Council (AEPC), the US imports $586.58 million worth of RMG products under 15 categories that currently enjoy GSP. India’s share of this pie is $17.97 million.
The MFN (most favoured nation) tariff in 15 products varies from 0.86 per cent to 14.6 per cent in which India gets duty access with 100 per cent margin of preference.
It may be 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 per cent of India’s total trade under GSP.
AEPC has identified, on the basis of current trade with US, that GSP withdrawal on as many as 11 products of the 15 may have a negligible impact on India’s apparel exports to US.
The high impact would be on women’s or girls dresses, not knitted or crocheted, containing 70 per cent or more by weight of silk or silk waste. This, APEC says, should be retained.
The moderate impact will be on shawls, scarves, mufflers, maintillas, veils and the like, not knitted or crocheted, containing 70 per cent or more silk or silk waste.