Withdrawal of duty benefit scheme by U.K. may impact labour-intensive goods’ exporters

The U.K.’s decision to withdraw duty benefit scheme Generalised Scheme of Preferences (GSP) may impact Indian exporters from leather and textile sectors as they were the major beneficiaries, according to experts and traders.

The U.K.'s decision to withdraw the duty benefit scheme from its Generalised Scheme of Preferences (GSP) may impact Indian exporters from certain labour-intensive sectors such as leather and textiles, which have been they were the major beneficiaries, according to experts and traders.

The U.K. is replacing the GSP with a new Developing Countries Trading Scheme (DCTS) from June 19.

Labour-intensive sectors, including certain textile items, leather goods, carpets, iron & steel goods and chemicals may get impacted due to this.

Global Trade Research Initiative (GTRI) said the United States, European Union (EU), Australia, Japan and many other developed countries grant unilateral import duty concessions to developing countries under their GSP schemes.

“As the U.K. has come out of the EU, it has designed its own GSP scheme. Each country sets a product-wise threshold limit, if a country’s exports cross the limit, the GSP concessions stop. The UK withdrawing GSP concessions on labour-intensive products was expected as the two countries are negotiating a free trade agreement,” GTRI co-founder Ajay Srivastava said.

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GSP concessions are available in full to exports from Least Developed Countries (LDCs). China does not get such concessions. He added that the firms, associations and countries request for restoration of concessions but it is rarely considered.