The Generalized System of Preferences is a program allowing developing countries to export specific products to developed countries with reduced or eliminated customs duties. The GSP program was designed to promote the growth of developing countries and reduce poverty in these countries.
- How it works
- Developed countries grant GSP preferences to beneficiary developing countries.
- The beneficiary developing countries export eligible products to the developed countries.
- The developed countries either reduce or abolish customs duties on the eligible products.
- Advantages
- GSP facilitates the economic development of developing countries.
- GSP assists new exporters in entering markets while the established exporters increase their market share.
- GSP assists importers in reducing costs and becoming more competitive.
- Eligibility
- An import must be on the list of GSP-eligible articles to qualify for GSP.
- The import must be imported directly from a beneficiary developing country.
- Countries providing GSP
- Australia
- Canada
- European Union (EU)
- Japan
- New Zealand
- United States (US)
India-US GSP
The United States (US) removed India’s Generalized System of Preferences (GSP) on June 5, 2019. GSP is a facility that provides developing countries with an opportunity to export goods to the US without paying duty.
- Why was India’s GSP status withdrawn?
- The US felt India was not giving fair access to its market.
- The US was concerned about India’s dairy and medical device industries.
- The US had problems with India’s e-commerce policy and data localization rules.
- What was the impact of the withdrawal?
- The withdrawal impacted India’s export-oriented sectors such as pharmaceuticals, textiles, agricultural products, and automotive parts.
- How did India react?
- India presented a solution to the US’s demands but the US refused it.
- India regarded the matter as part of the normal process and continued building up its relationship with the US.
