This report originally aired on CNN-IBN on December 13, 2006.
New Delhi: The last week of the latest US Congress saw the passage of the Indo-US nuclear deal, but there was a second - lesser known - victory for India. The Congress also extended the Generalised System of Preferences (GSP), program for another two years.
The GSP provides developing countries like India with lower tariffs on certain exports - such as gems and jewelry and textiles - to countries such as the US. These tariffs make such exports competitive, but India was close to losing these preferential tariffs when some US Congressmen campaigned to remove it from the GSP.
Says Head, International Trade Policy, CII, T S Vishwanath, "Indian textiles, gems benefit from GSP, which has now been extended by the US Congress to the end of 2008. However, the question is do countries like India need a GSP to remain competitive in US markets?"
But India managed to dodge the silver bullet - a clause which would have eliminated its lucrative gems and jewelry export business from qualifying for the GSP.
"We have about a million people who are dependent on the jewelry sector for employment. The US President has the power to exclude imports of over $175 billion. This makes items (that make up 75 per cent of US imports) vulnerable too," says Vishwanath.
With the GSP affecting about nearly five per cent of Indian exports, its renewal by the US Congress comes as a good omen for Indo-US bilateral trade.