Impact of US GSP Reinstatement on India's Dairy Export Potential

The United States is considering reinstating India's Generalized System of Preferences (GSP) status, a move that could open up duty-free exports valued at over $1 billion for Indian agricultural products. This policy change is particularly significant for the agribusiness sector, including dairy, by potentially reducing tariffs that have ranged from 3% to 6% on key items.

The GSP status previously allowed beneficiary countries to export certain products to the US without tariffs. Its withdrawal had imposed additional costs on Indian exporters, affecting their competitiveness. The reinstatement is expected to lower entry costs and boost profit margins for farm exports.

Key commodities like Basmati rice, grapes, and mangoes are likely to benefit directly from this tariff relief. However, the dairy sector could also see indirect benefits. Lower costs for competing agricultural inputs might free up resources for dairy production, leading to enhanced infrastructure and government support for the sector.

Despite the positive outlook, the final decision on the GSP status remains subject to resolving trade disputes between the US and India, including those at the World Trade Organization. These negotiations are crucial for realizing the full potential of duty-free trade.

Reinstating the GSP status is a strategic goal for India, aiming to solidify its position in global farm exports. The anticipated reduction in trade barriers is a pivotal moment for improving market penetration and profitability for high-value agricultural commodities.