Hike in EU customs duty to hit Indian exports

Nov 25 2013, 08:48 IST
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EU has decided to 'graduate' exports of several items including textiles and motor vehicles from India out of its GSP scheme. EU has decided to 'graduate' exports of several items including textiles and motor vehicles from India out of its GSP scheme.
SummaryNew Delhi will request Brussels to retain preferential status.

New Delhi will ask Brussels to reconsider the decision by the European Commission (EC) to end a preferential tariff system for imports from India and other developing nations. Should the current regime of low customs duties end, it would make Indian goods more expensive with exporters paying anywhere between 6% and 12%. We have a months time before the new GSP (generalised system of preferences) regime to convince the EU, an official familiar with the development told FE.

The EU has decided to graduate exports of several items including textiles, chemicals, minerals, leather goods and motor vehicles from India out of its GSP scheme with effect from January. Preferential or nil customs duty to exports from developing nations under GSP is an exception to the World Trade Organisation obligation of member states to give every other member equal and non-discriminatory treatment under the Most Favoured Nation status. Other products to be excluded from the preferential import tariff include bicycles, aircraft, spacecraft, ships and boats. Indias exports to the European Union, which accounted for 17% of the countrys total exports, shrank by over 4% in 2012-13 to $50 billion.

According to official sources, Indias commerce ministry will also protest the EUs move to simultaneously grant zero customs duty on textile imports from Pakistan from January. This, according to New Delhi, will affect the regional competitiveness of Indias textile industry, its second largest employment creator after agriculture.

EU export duty move

We will take it up with Brussels because for textiles, it is a double whammy. The EU has removed Indian textiles exports from GSP, which means higher duty at EU borders, and they are in the process of giving textile exports from Pakistan GSP Plus status, which means zero duty, an official confirmed to FE.

The move gives clothing, apparel and accessories exports from Pakistan a 10% duty advantage over those from India. The official explained that the EU Parliamentary Committees vote on November 5 to give GSP Plus status to textiles from Pakistan will have to be ratified by the European Parliament, which it is expected to do in early December. The ECs decision to graduate the Indian textile industry out of GSP from January 1 already has the approval of the European Parliament.

The EUs move to deny India the GSP benefit for certain goods is part of its plan to redesign the scheme. The

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