The US decision to withdraw GSP benefits will not have a significant impact on Indian exports to America.
India mainly exports raw materials and intermediate goods such as organic chemicals to the US.
The US decided to end the preferential trade status granted to India under the justification that India failed to assure America of equitable and reasonable access to its markets. Apparently the US is also unhappy with the recent tightening of foreign direct investment rules on e-commerce.
Removing India from the GSP program would not take effect for at least 60 days after notifications to Congress and the Indian government, and it will be enacted by a presidential proclamation. As many as 1,900 Indian products from sectors such as chemicals and engineering get duty free access to the US market under the GSP introduced in 1976.
India is the largest beneficiary of the United States’ GSP scheme, which is devised to promote exports of developing countries and which allows duty-free access to about 3,500 products.
Continuation of GSP benefits in fact is expected to help boost the competitiveness of American manufacturers too by lowering their costs. About two thirds of US imports under GSP are raw materials, components, or machinery and equipment used for manufacturing goods for domestic consumption or for exports.