India’s Trade with the U.S. Grows Despite Loss of GSP Status
Despite losing the Generalized System of Preferences (GSP) status during the Trump administration, India’s trade with the United States has shown resilience and growth, according to a report by the State Bank of India. The report highlights that while the GSP status has not been restored, India has increased exports in key sectors like footwear, minerals, chemicals, and machinery, gaining a comparative advantage over competitors like China.
From 2017 to 2021, India developed a Revealed Comparative Advantage (RCA) in exports of metals, minerals, chemicals, footwear, textiles, and intermediate clothing goods, with RCA values consistently above 1. This indicates a competitive edge, especially as India positions itself as an alternative to China in these industries.
The report also suggests that ongoing supply chain relocations and the potential for a second Trump administration could further boost India’s role in sectors such as pharmaceuticals, electronics, and textiles. A detailed look at India’s iron and steel exports to the U.S. shows a 44.7% increase from FY20 to FY21, despite U.S. tariffs on steel and aluminum.
India has maintained a trade surplus with the U.S., showcasing the strength of its export sector even amid restrictive tariffs. India’s growing presence in the U.S. market and its comparative advantage in specific sectors position it well to continue benefiting economically as global supply chains and trade policies evolve.
Doubts Revealed
GSP Status -: GSP stands for Generalized System of Preferences. It is a program that allows some countries to export goods to the U.S. without paying certain taxes, making it cheaper for them to sell their products there.
Trump Administration -: The Trump Administration refers to the time when Donald Trump was the President of the United States, from 2017 to 2021. During this time, some policies affected trade between countries, including India.
State Bank of India -: The State Bank of India (SBI) is the largest bank in India. It provides financial services and reports on economic matters, like trade between India and other countries.
Revealed Comparative Advantage -: Revealed Comparative Advantage is a way to measure how well a country can produce certain goods compared to other countries. It shows which products a country is better at making and exporting.
Supply Chain Shifts -: Supply chain shifts refer to changes in the way products are made and delivered around the world. These changes can affect which countries are involved in making and selling different products.
Trump 2.0 -: Trump 2.0 suggests the possibility of Donald Trump becoming President of the United States again. This could lead to changes in trade policies that might affect India’s trade with the U.S.