While Commerce and Industry Minister Piyush Goyal has said India does not need development assistances like GSP
hitherto provided by other nations and should be able to become competitive on its own, the issue has continued to be part of trade talks between India and the US. On the other hand, traders have pointed out Indian export remained under pressure due to increasing competition from low-cost rivals, and that surrendering GSP
claims would mean handing away market share.
In 2018, the US launched an eligibility review of India’s compliance with GSP market access criteria. It concluded the country had implemented a wide array of trade barriers that create serious negative effects on commerce. Subsequently, President Donald Trump signed an executive order in November that ended duty-free status for 50 items.
India is the largest beneficiary nation under the GSP, with total benefits from tariff exemptions amounting to $260 million in 2018, according to the data from the USTR’s office.
While goods worth $6.35 billion were covered under GSP in 2018-19, it was only a small piece of India's overall exports to the US in the same period, which stood at $51.4 billion.
In respect of products having GSP benefits
of 3 per cent or more, exporters had found it difficult to absorb the loss, the Federation of Indian Export Organisations (FIEO) has said. Despite having a minimal impact on India's overall outbound trade with the US, specific exports from India in a diverse set of sectors such as jewellery, leather, pharmaceuticals, chemicals and agricultural products has faced higher costs and competition, FIEO said.
India has maintained that GSP benefits
were "unilateral and non-reciprocal in nature extended to developing countries", and that they couldn't be used for advancing Washington DC's trade interests and non-discriminatory benefits.