PIB – June 1 , 2019


Topics Covered- Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth.

Generalized System of Preference (GSP)

Context

  • The United States of America (USA) has withdrawn India’s GSP benefits. These are unilateral, non-reciprocal and non-discriminatory benefits extended by some developed countries to developing countries.

What is Generalised System of Preferences (GSP)?

  • The Generalized System of Preferences (GSP) is a U.S. trade program to promote economic growth in the developing world by providing preferential duty-free entry for products from 129 designated beneficiary countries and territories.
  • The GSP was instituted on January, 1976, by the Trade Act of 1974.
  • The GSP program has effective dates which are specified in relevant legislation, thereby requiring periodical reauthorization in order to remain in effect.
  • GSP has been given on non-reciprocal basis yet the US has linked it with market access and tariff reduction which is against the basic tenets of GSP.

Benefits of Generalized System of Preference

  • Economic growth and development in the developing world by helping beneficiary countries to increase and diversify their trade with the developed nations.
  • This tariff preference helps new exporters to penetrate a market and established exporters to increase their market share and to improve upon the profit margins, in the donor country.
  • Company Competitiveness is boosted by GSP as it reduces costs of imported inputs used by companies to manufacture goods.
  • GSP promotes Global values by supporting beneficiary countries in affording worker rights to their people, enforcing intellectual property rights, and supporting the rule of law.
  • Through the benefit that accrues to the importer by way of reduced tariff or duty free entry of eligible Indian products and Indian exporters benefit indirectly.

Who are the beneficiaries under GSP?

  • The beneficiaries of GSP are around 120 developing countries.
  • As of 2017, India and Brazil were the major beneficiaries in terms of export volume realized under GSP.
  • Imports from China and some developing countries are ineligible for GSP benefits.
  • The beneficiaries and products covered under the scheme are revised annually.

US Concern regarding GSP

  • President Donald Trump’s case on what he calls “unequal tariffs” from India rests on the trade relationship in favour of India.
  • Indian exports to the U.S. in 2017-18 stood at $47.9 billion, while imports were $26.7 billion.
  • Trump Administration has criticized India for a range of unfair trading practices.
  • India’s decision on data localisation for all companies operating in India, and the more recent tightening norms for FDI in e-commerce has aggravated the situation.
  • Sanitary and phytosanitary (SPS) barriers in India limit U.S. agricultural exports.
  • Impact on India on GSP duty benefit withdrawal by US
  • It will have a marginal impact on few domestic sectors such as processed food, leather, plastic, and engineering goods, exporters body FIEO.
  • India is predominantly exporting intermediate and semi-manufactured goods to the US under the GSP.
  • The same has helped in cost-effectiveness and price-competitiveness of American downstream industry.
  • Federation of Indian Export Organisations (FIEO) believe that as these sectors were availing higher GSP benefits, the government should look into providing fiscal support to these segments.
  • The removal of these duty concessions would make the above products relatively uncompetitive in terms of prices in the US market compared to exports from other developing countries.
  • Therefore, the GSP withdrawal will also impact the competitiveness of many manufacturing sectors and will hit the consumers at the same time.
  • The withdrawal of the benefits will also hit the import diversification strategy of the US where it is keen to replace China as the main supplier to other developing countries.
  • (FIEO) believes that India’s exports to the US will remain unaffected despite withdrawal.

Topic covered – Prelims Specific

Yoga Locator’ and ‘Bhuvan App’

Context

  • Ministry of AYUSH announced two Applications ‘Yoga Locator’ and ‘Bhuvan App’ related to International Day of Yoga 2019.

About

  • Theme for International Day of Yoga (IDY) 2019 will be ‘Yoga for Heart’.
  • ‘Yoga Locator’ is a mobile application is for IDY to record and show Yoga events across the world.
  • ‘Bhuvan App’ application has been designed in collaboration with ISRO. It will provide geo time location and documentation.

International Day of Yoga

  • It is celebrated on 21 June per year.
  • The first International Day of Yoga was observed all over the world on June 21, 2015.
  • It is celebrated to spread awareness about practicing yoga.
  • In December 2014, United Nation General Assembly had unanimously adopted India-led resolution to observe 21st June as ‘International Day of Yoga’.

 Why 21 June?

  • 21st June was selected because it represents summer solstice (one of the two solstices) and it is the longest day in the Northern Hemisphere which has special significance in many parts of the world.

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