India Ratings and Research (Ind-Ra) believes the initial withdrawal of the generalised system of preference (GSP) benefits by the US on over 3,000 products that were either under the low tariff or no tariff categories will have limited impact on Indian textile exports. The withdrawal of benefits under GSP would primarily affect apparel exports under the textile industry, but the impact would be modest, as less than 1% of India’s apparel exports were receiving GSP benefits.
Ind-Ra believes the move by the US would mainly impact the woven
silk garments segment, which constitutes 50% of the 1% of India’s total apparel
exports that had been receiving GSP benefits. The
other textile product categories that would be impacted include silk woven
clothing for women (HSN 62044910), shawls, scarves, mufflers, mantillas, veils, etc, containing 70 per cent or more by weight
of silk or silk waste.
In the past, the US has restored GSP
benefits for countries such as Liberia, Argentina and Myanmar, after deeming
that they had made ‘sufficient progress’ to become eligible again. However,
Ind-Ra believes the reinstatement of GSP benefits for India would be
conditional and it would be accompanied by the need to make commitments or
fulfil certain conditions. In the event of non-reinstatement, the agency
expects the government to come up with a refund of taxes scheme, like Refund of
State Levies, for the affected sectors.
Additional information is available at www.indiaratings.co.in.
Ratings are not a recommendation or suggestion, directly or indirectly, to you or any other person, to buy, sell, make or hold any investment, loan or security or to undertake any investment strategy with respect to any investment, loan or security or any issuer.