CNBC-TV18's Ronojoy Banerjee reports that the European Commission has decided to withdraw benefits under the GSP (Generalised Scheme of Preferences) scheme which will impact a slew of sectors led by the auto industry on higher export duties.
Indian automobile exports to the European Union (EU) are set to get more expensive. CNBC-TV18's Ronojoy Banerjee reports that the European Commission has decided to withdraw benefits under the GSP (Generalised Scheme of Preferences) scheme which will impact a slew of sectors on higher export duties.
Under the GSP scheme, exports from emerging economies were levied lower duties as compared to exports from developed economies. For instance, auto exports from emerging economies to European Union attracted a duty of 6.5 percent as compared to 10 percent from some of the other economies.
Senior government sources indicate that from January 1, 2014 the benefit of lower duty offered under the GSP will be withdrawn. And the sectors that would be adversely affected include auto, leather, textiles and chemicals.
This has not been received positively by the auto industry. Senior representatives of the auto industry allude that the withdrawal of lower duty could be in retaliation to India’s refusal of the EU’s demands on the auto sector as part of the free trade agreement.
Senior government sources refute the allusion and point out that the benefits have been also withdrawn for countries like China and Thailand.
Maruti-Suzuki officials say that the company’s exports to European Union, which stand at over 30 percent, will be affected from 2014 and are hopeful that markets in Latin America and Africa would develop and mature by then.