About GSP

• The Generalized System of Preferences (GSP) scheme is a voluntary trade measure implemented by developed countries that provide an advantageous or preferential tariff treatment to imports from developing countries.
• It was instituted in 1971 under the aegis of the United Nations Conference on Trade and Development (UNCTAD). 
• These non-reciprocal benefits extended by some developed countries to developing countries are expected to contribute to developing countries’ export growth particularly in the manufacturing sector.
• More than 20 developed countries including Australia, Canada, Japan, New Zealand, the Russian Federation, Switzerland, United Kingdom and the United States of America grant GSP preferences. 
• The exported goods must fulfill the requirements of the Rules of Origin laid down by the importing country to benefit from the GSP. 
  • The Rules of origin comprise a set of requirements laid down by the importing country, which products from developing countries must fulfill to be eligible for preferential tariff treatment upon import in that country. 
  • Rules of origin” are the criteria used to define where a product was made. Those rules define the economic nationality of the goods. 

Why in News?

• India has sought restoration of its beneficiary status under the US Generalized System of Preferences programme to facilitate trade exports from India. 
• The previous Trump administration in the U.S. revoked the GSP from India in 2019 citing India had denied adequate access to its agricultural and dairy markets and had placed prohibitive price controls on medical devices.

widening trade gap with India.

• The US is India’s single largest trade partner and the only large economy where India exports more than it imports. 

• The GSP allows eligible developing countries to export duty-free goods to the U.S. About 1,900 Indian products from sectors such as chemicals and engineering were getting duty-free access to the US market under the GSP, introduced in 1976.