Subsidies Out! What Next?
The investment mood is sour. Global economies are slowing down and deal street anticipates that it is likely to head towards recession. Recent Indian trade data, confirms the country is not immune to the trend. Talking about exports specifically, according to the Ministry of Commerce June’ 2019 trade data, merchandise exports from India plunged to 9.07 percent.
However, it's worth noting that the ongoing trade wars have had very little impact on international trade. As per recent reports, Chinese U.S. dollar-denominated exports in July rose 3.3%. Even though Indian export data is not very impressive, the US revoking the country’s GSP status has very little do with it.
In the coming future, all eyes are on the government as it now plans to scrap the MEIS scheme, which the US has been mulling against for quite some time.
GSP roll-back: Exports of goods under tariff system to US up 32 pc
Exports of Indian goods, which were enjoying benefits under the preferential tariff system GSP, to the US register a growth of 32 percent in June, according to Trade Trade Promotion Council of India (TPCI). The US rolled back export benefits to over 1,900 Indian goods from June 5. These incentives were provided by America under its Generalised System of Preference (GSP) programme.
Commodity prices fall worldwide, falling rupee helps India market
Worsening US-China trade war raising fresh growth concerns and intensifying geo-political tensions has rattled commodity markets globally. In India, however, prices of commodities depending on imports have been supported by sharp fall in the rupee exchange rate against dollar. Base metals and crude oil were down due to growth concerns while gold, silver prices shot up to new levels globally, while in India falling rupee has only fuelled the rally.
Economic slowdown: Govt plans urgent steps to boost exports
The government is weighing a raft of measures — including “full reimbursement” of various imposts on exports and relaxed lending norms to improve credit flow — to reverse a slide in the growth of outbound shipments in recent months, sources told FE. While the commerce ministry has already circulated a Cabinet note to phase out the flagship Merchandise Exports from India Scheme (MEIS) with a more WTO-compatible regime under which various state and central levies on inputs consumed in exports will be reimbursed, the government will likely top it up with an assurance that all embedded taxes borne by exporters will be fully refunded.
WTO likely to set up panel to decide on India’s sugar sops
Brazil, Australia and Guatemala have requested the World Trade Organisation (WTO) to set up dispute panels to rule on India’s sugar subsidies the second time round after India rejected the request at the last meeting of the Dispute Settlement Body (DSB) last month. The request for dispute settlement panels put in by the three countries will be taken up at the DSB meeting scheduled on August 15. Since the second request made to the DSB cannot be rejected, panels are now likely to be formed at the WTO which will decide whether India’s sugar subsidies are valid or not.
Exporters seek alternative scheme after MEIS removal
Tirupur Exporters’ Association (TEA) has urged the government to come out with an alternative scheme with the same benefits of the Merchandise Exports from India Scheme (MEIS) for the growth of the readymade garments industry. In its appeal to the Centre, TEA said that MEIS, a lifeline support given to exports including readymade garments, was removed from August 1, 2019 onwards due to more pressure coming from the WTO, further to a complaint lodged by the US with the WTO dispute settlement body.
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