India accepts the decision of the US to withdraw duty-free benefits to its exporters, says India's Commerce Minister Piyush Goyal.
The United States Government withdrew Generalized Systems of Preferences (GSP) benefits to India, effective from 5 June. GSP existed to promote development by allowing duty-free entry for products from designated countries, which provided benefit to the US.
“Accordingly, it is appropriate to terminate India’s designation as a beneficiary developing country effective June 5, 2019,” the US president declared on May 31, 2019
After Trump’s announcement, the Indian Commerce Minister had stated, "India is no more an underdeveloped or least developed country that we will look at that kind of support. We believe we can be export competitive at our own strength."
India's current export of goods to the US is about $50 billion. Not all products are under GSP and most of the products that India exports to the US are not under GSP, for example - diamonds, jewelry, motor vehicles, fuel (refined crude), pharmaceuticals, apparel products, etc.
Thus, the impact of these actions will be felt differently across the various sectors and export items. Majorly, items produced by small businesses will get impacted. Having a very low tariff on these items may cause trouble for small businesses.
In terms of fashion, the Indian textile industry is the 2nd largest exporter of textiles in the world. Thus, we are bound to see some impact on the fashion trade.
According to research, the textile industry employs about 40 million workers directly and 60 million indirectly. India's overall textile exports during Financial Year (FY) 2015-16 stood at USD 40 billion.
India's overall textile exports during FY 2017-18 was US$ 39.2 billion and is expected to increase to US$ 82.00 billion by 2021. This is over double the previous financial year, with FY19 exports amounting to US$ 31.65.
India is also the largest producer of cotton in the world. In 2017, India’s share in the global trade of textiles and apparel was approximately 5%. Between Apr-Oct 2018, total textile and clothing exports stood at Rs 1.52 trillion (US$ 21.95 billion). Ready-made garments (RMG) exports from India stood at Rs 61,135.34 crore (US$ 8.86 billion) at the same time.