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The European Union has announced a new scheme of Generalized system of tariff preferences (GSP) under which tariff exemptions / concessions have been granted on import of certain commodities into EU from least developed countries / developing countries vide EC Regulation No.2501/2001 dated Dec 10, 2001. The new GSP scheme is for the period from Jan 1, 2002 to Dec 31, 2004.
The salient features of the new GSP scheme are briefly stated as under:
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India continues to be one of the beneficiary countries in the EC Regulation.
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The
earlier classifications of products into four categories
namely; very sensitive, sensitive, semi-sensitive and
non-sensitive under the previous GSP scheme have now been
re-grouped into two categories namely; sensitive and
non-sensitive. A statement showing the categorization of
products falling under Chapter 41, 42 and 43 is attached
herewith for your information. (Annexure-I)
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The tariff duties on ‘non-sensitive’ products continue to be suspended. In other words, there will be no import duty for items falling under ‘non-sensitive’ category.
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The items under ‘sensitive’ category will enjoy tariff preferences.
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However, due to the application of graduation mechanism to India, the tariff preferences for items falling under Chapter 41, 42 & 43 have been abolished with effect from 1.1.1998 under the GSP scheme. In other words, although India is one of the eligible countries for the GSP treatment, India has not been extended with tariff preferences for these items.
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The graduation mechanism is applied in terms of the EC Regulation, and it is both country-specific and product-specific. Some countries and sectors were already identified based on certain criteria, which relates to the level of development of the beneficiary countries and their respective trade specialization etc. By applying such graduation mechanism to India for items falling under Chapter 41,42 & 43, the preferential treatment was totally withdrawn from Jan 1, 1998. Therefore, MFN tariff would only be applicable for import of these products from India into EU, which was classified as ‘sensitive’ items. The MFN tariff details are as follows:
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Chapter
41: Tariff ranges between 2% and 6.5% with a few
items allowed duty free import .
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Chapter 42: Tariff ranges between 1.7% and 9.7%.
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Chapter 43: Tariff ranges between 2.2% and 3.7% with a few
items allowed duty free import.
The footwear and parts thereof falling under Chapter 64 are categorized as ‘sensitive’ items, and India would continue to be one of the beneficiary countries for exporting footwear to EU. In other words, tariff preferences would continue to be available for import of items falling under Chapter 64 from India into EU. The preferential tariff is arrived at by reduction of flat rate of 3.5 per cent points from the MFN Tariff. The statement showing the preferential rate of duties under the new GSP scheme in respect of Chapter 64 is attached herewith for ready reference
(Annexure-II).
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