No initial impact of GSP withdrawal on exports to US; but need to watch for clear trend: EEPC India

New Delhi, July 30 (KNN) The termination of the Generalised System of Preferences (GSP) by the US in the first week of June does not seem to have an "overly negative impact" on Indian engineering exports to the world's largest economy, though the trend would be clearer only in the next few months, an EEPC India analysis has shown.  

Unlike most of the global markets, engineering exports to the US remained in the positive territory both for June and the first quarter of the current fiscal.

"Though our engineering exports to the US went up to USD 990.5 million in June, 2019 from USD 913 million in the same month of 2018 , registering a growth of 8.5 per cent, we have got to be watchful whether and how the withdrawal of the GSP by the US is panning out, " said Ravi Sehgal, EEPC India Chairman.

For the cumulative three-month period of the current fiscal ending June, the shipments of engineering goods to the US went up to USD 2.92 billion , showing a growth of 5.2 per cent year on year from USD 2.78 billion in the April-June period of 2018-19, according to EEPC release.

However, contrary to this trend, India's overall engineering exports during June, 2019 fell by 2.31 per cent to USD 6.36 billion from USD 6.51 billion while for the April-June period the decline was by  1.85 per cent to USD 20 billion from USD 20.04 billion, it added.

''The termination of US -GSP on June 5, 2019 does not seem to have an overly negative impact on Indian exports, at least in June 2019. This could be because exports have already been contracted out and the margins lost may have been shared by both the exporters and importers. We will need to monitor the trend in the next few months,'' said the analysis of the engineering exports to the US and other major markets.

It said, the US retained its numero uno position, being the top exporting destination for India's engineering products during June 2019 over June 2018 as well as for April-June 2019 over April-June 2018, registering a positive growth rate.

The major dent in the engineering exports has been witnessed in the European Union where the Indian shipments were down by over 17 per cent in June, 2019 to USD 1.14 billion from USD 1.38 billion in the same month of the previous fiscal. For the cumulative three month period, the drop was 9.2 per cent to USD 3.85 billion from USD 4.25 billion in the trading bloc.

''Several restrictions in the EU markets which are kind of tariff and non-tariff barriers have impacted our exports to the European markets and we have been urging the government to take up the issue with the EU headquarters," said the apex organization of the Indian engineering exporters.

In so far as the exchange rate is concerned, rupee vis-à-vis the US dollar depreciated by 2.43 percent in June, 2019 over June 2018. A noteworthy feature has been the relative hardening of the rupee since January 2019, indicated by the narrowing in the rate of depreciation over corresponding months of last year.