The U.S. government's decision to withdraw trade benefits under the Generalised System of Preferences is likely to impact India's gems and jewellery exports the most, a report by rating agency Crisil Ltd. showed.
India tops the list of exporters to the U.S. in the gems and jewellery sector, which is already under pressure in the domestic market due to stringent lending rules and a liquidity crunch, Crisil said.
“The GSP withdrawal will affect exporters of gems and jewellery the most because around 15 percent of such exports availed of its benefits in 2018,” said Hetal Gandhi, research director at Crisil. “Now, there will be an additional duty of around 7 percent on exports, which will reduce competitiveness of domestic exporters and put pressure on margins.”
The withdrawal, however, will have a limited impact on India-U.S. trade overall, the Crisil report said. India's goods and services trade with the U.S. totalled $142.1 billion in 2018 of which exports were $83.2 billion.
About 7.5-7.8 percent of India's exports to the U.S. used to come under the GSP scheme, resulting in about $260 million worth of savings.
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