EEPC Predicts GSP Benefit Withdrawal to Hit MSME Exports

The Engineering Export Promotion Council (EEPC) of India raised concern over the recent announcement by the US President Donald Trump to withdraw India's name from the Generalized System of Preferences (GSP) program on March 5, 2019.

"Withdrawal of GSP will definitely have an adverse impact on the products (833 engineering products out of 1900 total products) exported from India under GSP programme which are mostly manufactured by Indian MSMEs", it said.

The EEPC added it has impressed upon the government to bring in a copper scrap policy in order to prevent import of inferior and hazardous material, raising concern over 60 per cent fall in copper and allied product exports in March, due to the shutdown of Sterlite's Tuticorin plant.

"In order to prevent the import of inferior quality and hazardous copper scrap, we would also like to suggest that the government develop internationally compatible standards and bring a copper scrap policy like the steel scrap," the apex engineering exporters' organisation said in a statement.

According to the council, there was a fall of 60.8 per cent in March 2019 compared to export of copper and copper products in the year-ago month. Cumulatively, the decline in the export of this critical material and its products was 69.4 per cent in the 2018-19, as against the previous year.

"Indian domestic refined copper production has fallen significantly during the first half of 2018-19 mainly due to the shutdown of the 400 KT, Tuticorin smelter of Sterlite which accounted for 40 per cent of the country's copper smelting capacity,'' the statement said.

The Supreme Court had recently dismissed a plea by Vedanta seeking access to its Tuticorin-located Sterlite Copper Smelting plant to carry out maintenance work.

In view of this, EEPC India feels that the declining trend in exports of copper would "continue".

"Domestic industry relies heavily on imports of copper concentrate from far-off countries, particularly from South Africa, in a big way. This really increases the cost of production. The duty on the copper concentrate is currently 2.5 per cent while the finished goods come at zero duty.

"Thus, there is a situation of inverted duty structure. The government could consider removal of this duty in order to help the industry become globally competitive," EEPC India Chairman Ravi Sehgal said.

Another source of imports of copper concentrate was Indonesia which, according to industry, has imposed an export tax.

"This is making our imports expensive," he said.A

According to the council, Indonesia is a free trade agreement (FTA) partner of India under ASEAN-India Free Trade Area and the Centre "should take up this issue at the government level."