India Appeals to U.S. Senators for Revival of Duty-free Imports

India is lobbying the US to restore duty -free imports from developing countries, including India, that were suspended earlier this year, stressing that it helped the labour-intensive small and medium enterprises. The scheme allowing duty-free imports was stopped in December 2010 when Congressional authorization for it was not renewed, following objections by some senators.

"Indian ambassador to the US Meera Shankar has written to a number of senators and the speaker for continuation of the scheme that was suspended on a flimsy ground," a government official told ET. India, the third largest beneficiary of the scheme, exported $3.48 billion of goods without import duty to the US in 2010, about one-eighth of its exports of $29.6 billion to the country, according to US data.

Developing countries with per capita income lower than $12,196 are eligible for Generalized System of Preferences, or GSP, which allows duty-free imports of over 3,000 products. However, beneficiaries can avail GSP only for those imports that do not exceed certain thresholds that are deemed to constitute "competitiveness."

India's exports of jewellery graduated out of the GSP scheme in 2007 when exports touched $2 billion, but it continues to get the benefit for products like handicrafts, carpets, wind-power generators, certain chemicals and motor vehicle parts. "Our embassy is trying to garner support within the Congress so that the legislation for renewing the GSP is passed at the earliest," the official said.

The GSP was not renewed following objections by Alabama Senator Jeff Sessions on extension of the benefit to sleeping bags from Bangladesh, which comprises less than 2% of total sleeping bag imports.

Indian exporters want the government to pressurise the US to sort out the matter soon as exporters getting the benefit were losing their competitive edge, especially against China, which does not qualify for benefits because of its communist rule.

The export promotion council for handicrafts has asked the commerce department to push the issue as a number of handicraft items like hand-hooked carpets, textile floor covering and brassware benefited from the scheme and would suffer in the absence of tax sops.

"It is very difficult for us to cope with competition from China in the absence of duty waiver," RS Gupta, an exporter of floor coverings said It was important that the US be convinced to restore the GSP scheme as the US market continued to be the primary market for India's exports, Fieo director general Ajay Sahai said.