The US has terminated India’s beneficiary status under the Generalized System of Preferences (GSP) trade programme effective June 5, ending over four decades of duty-free access to the US markets forIndian goods.

CRISIL Research, however, believes the withdrawal will have limited impact on India’s exports, though the timing of the move does hint at trade tightening.

This report delves into trends in US-India trade over the past five years, especially in light of growth in exports to the US from other key countries,and analyses how the withdrawal of GSP benefits, along with various other factors at play, could tip the scales in the countries’ bilateral trade.

Around 16% of India’s total merchandise exports is to the US

India exported merchandise worth $323 billion and services of $205billion in 2018, aggregating $528 billion in global trade.

The top three regions – the European Union (EU), the US, and theMiddle East – consume almost half of India’s merchandise exports.

Over the past three years, India’s overall merchandise exports loggeda compound annual growth rate (CAGR) of 7% in dollar terms. In comparison,merchandise exports to the US and the EU logged 9% CAGReach, while exports to the Middle East stagnated at 1%.

In calendar 2018, India’s goods and services trade with the US totalled$142.1 billion, of which exports were $83.2 billion. The US’s trade deficitwith India, though, has declined continuously over the past fiveyears, from $31 billion in calendar 2014 to $24.2 billion in calendar2018. This is because India’s exports to the US have logged a CAGR of6%, while its imports from the US have run up at 11%.