Sectors such as textiles, leather goods, carpets, iron and steel goods and chemicals could be affected by the UK’s latest move to cap its country-wise exports. (Picture used for representational purposes only) | Photo Credit: Getty Images
According to experts and traders, Britain’s decision to withdraw duty benefit scheme from its Generalized Scheme of Preferences (GSP) may hit Indian exporters from some labour-intensive sectors such as leather and textiles, which were major beneficiaries.
The UK is replacing the GSP with a new Developing Country Trade Scheme (DCTS) from 19 June.
Due to this, labour-intensive sectors including some textile goods, leather goods, carpets, iron and steel goods and chemicals may be affected.
Global Trade Research Initiative (GTRI) said that United States, European Union (EU), Australia, Japan and many other developed countries give unilateral import duty concessions to developing countries under their GSP schemes.
“Since the UK came out of the European Union, it has drawn up its own GSP scheme. Each country sets a product-wise limit, if a country’s exports cross the limit, the GSP concessions stop. GTRI co-founder Ajay Srivastava said the UK was looking forward to withdrawing GSP concessions on labour-intensive products as the two countries negotiate a free trade agreement.
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GSP concessions are fully available for exports from Least Developed Countries (LDCs). China does not get such concessions. He said companies, unions and countries request reinstatement of concessions but this is rarely considered.
“Since the concessions are small, India should stop participating in GSP schemes and stand like China. GSPs are relics of the colonial mindset and should be used only by LDCs,” Mr Srivastava said.
India’s $2.5 billion exports entitled to GSP benefits in UK
Federation of Indian Export Organizations (FIEO) Director General Ajay Sahai said that the export share of some Indian goods to the UK has crossed a certain threshold, and hence, those sectors will no longer be able to avail GSP benefits.
Some sectors like metals will continue to benefit, he added.
“India will get benefits under standard preferences instead of enhanced preferences. LDCs will get more benefits,” said Mr. Sahai.
India and the UK are negotiating a Free Trade Agreement from January 13, 2021. Ten rounds of talks have been completed till June this year and both sides are aiming to conclude the talks at the earliest.