FIEO clarifies the limited impact of the EU's GSP withdrawal extension on Indian exports. It states that reports of widespread effects are misleading due to broad product categories, as many products already have zero duty or remain eligible.
The Federation of Indian Export Organisations (FIEO) clarified the recent reports concerning the European Union's notification that extends the withdrawal of Generalised System of Preferences (GSP) benefits for specific Indian product categories. This clarification addresses concerns regarding the scope and actual trade implications of the EU directive.
FIEO states that the practical impact of this notification on Indian exports remains limited despite widespread reports suggesting a broader effect on trade values. According to a FIEO press communication, while reports suggest that approximately 87 per cent of India's exports to the EU fall under the broad product categories mentioned in the notification, this figure does not translate into higher duties for that entire share of exports. The organisation notes that the broad nature of the product groupings leads to a misunderstanding of the actual fiscal burden on exporters.
Understanding the Real Impact
The federation explains that the EU notification refers to broad product groupings within which several factors mitigate the impact. Firstly, many products within these categories already attract zero customs duty under the EU's Most Favoured Nation (MFN) regime. According to FIEO, these products "remain unaffected by the withdrawal of GSP preferences" because they do not rely on the preferential system for duty-free access.
Mitigating Factors
Furthermore, FIEO points out that specific tariff lines continue to maintain their eligibility for benefits. The organisation states that "many specific tariff lines within these broad categories continue to be eligible for EU GSP benefits, subject to applicable rules of origin and conditions." This distinction ensures that a significant portion of goods under the mentioned categories does not face the predicted tariff hikes.
An Extension, Not a New Barrier
The trade body also emphasises that the withdrawal of GSP benefits represents an extension of existing policy rather than a new trade barrier. FIEO underlines that, "The current notification merely extends the validity of the earlier suspension of preferences, which has been in place for these product groups for the past few years. No additional products have been newly brought under GSP withdrawal through this extension."
Advice for Exporters
The organisation suggests that "exporters are advised to assess their position at the tariff-line (HS code) level, rather than at the level of broad product categories." This detailed analysis allows individual businesses to determine their actual duty liability accurately. (ANI)
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