Hopes Pegged on India-EU FTA as GSP Benefits are Fully Suspended
The recent suspension of GSP (Generalized System of Preferences) benefits for about 87% of Indian exports to the European Union (EU) has caused quite a stir in the Indian business community. This move, which comes after the expiry of the GSP scheme on December 31, 2020, has left many Indian exporters worried about the future of their businesses. However, amidst this uncertainty, there is a ray of hope – the India-EU Free Trade Agreement (FTA).
The GSP scheme, which was first introduced in 1971, allowed developing countries to export certain goods to developed countries at reduced or zero tariffs. This was seen as a way to promote economic growth in these countries and improve their trade relations. India has been one of the biggest beneficiaries of this scheme, with the EU being its largest trading partner. However, with the expiry of the GSP scheme, Indian exporters are now faced with higher tariffs, making their products less competitive in the EU market.
According to expert estimates, the suspension of GSP benefits will impact about 87% of Indian exports to the EU, which amounts to approximately $6 billion in trade. This includes products such as textiles, chemicals, and engineering goods. This sudden blow to Indian exporters has raised concerns about the future of their businesses and the overall impact on the Indian economy.
However, amidst all the uncertainty, there is a glimmer of hope in the form of the India-EU FTA. The negotiations for this agreement have been going on for over a decade now, with the aim of enhancing trade and investment between the two parties. The FTA is expected to provide a more stable and predictable trade environment for Indian exporters, with the elimination of tariffs on a wide range of products.
The India-EU FTA, once implemented, is expected to boost India’s exports to the EU by over 30%. This would not only offset the impact of the GSP suspension but also provide a much-needed boost to the Indian economy, which has been struggling due to the COVID-19 pandemic. The FTA is also expected to attract more foreign investment into India, creating job opportunities and boosting economic growth.
Moreover, the FTA would also help in diversifying India’s export basket, reducing its dependence on a few select products. This would make Indian exports more resilient to any future shocks, such as the suspension of GSP benefits. The FTA would also open up new markets for Indian products, giving them access to over 500 million consumers in the EU.
The negotiations for the India-EU FTA have faced several roadblocks in the past, with both parties struggling to reach a consensus on various issues. However, with the current situation, there is a renewed sense of urgency to finalize the agreement. The Indian government has also expressed its commitment to expedite the negotiations and reach a mutually beneficial agreement with the EU.
The FTA is not just about trade and economic benefits, but it also has strategic implications for both India and the EU. The agreement would strengthen the partnership between the two parties, both politically and economically. It would also send a positive message to the global community about the importance of free and fair trade.
In conclusion, while the suspension of GSP benefits has caused concerns for Indian exporters, the India-EU FTA offers a glimmer of hope. This agreement has the potential to not only offset the impact of the GSP suspension but also provide a much-needed boost to the Indian economy. The negotiations for the FTA must be expedited, and a mutually beneficial agreement must be reached at the earliest. This would not only benefit Indian exporters but also strengthen the partnership between India and the EU. The future looks bright, and we must remain optimistic and hopeful for a successful India-EU FTA.
