India-US Current Affairs

Generalized System of Preferences: US announces eligibility review of India

The United States Trade Representative (USTR) has formally announced that it is reviewing eligibility of India, Indonesia and Kazakhstan in Generalized System of Preferences (GSP) based on concerns about countries’ compliance with program. The reviews are based on Trump administration’s new GSP country eligibility assessment process as well as GSP country eligibility petitions

Key Facts

For India, GSP country eligibility review is based on concerns related to its compliance with GSP market access criterion and two petitions related to same criterion. The petitions were filed by US dairy industry and US medical device industry requested review of India’s GSP benefits, given Indian trade barriers affecting US exports in those sectors.

For Indonesia, GSP country eligibility review is based on concerns related to its compliance with GSP market access criterion and GSP services and investment criterion. Kazakhstan’s eligibility review is based on concerns related to its compliance with the GSP worker rights criterion.

Generalized System of Preferences (GSP)

GSP is largest and oldest US trade preference programme introduced in 1976. It is designed to promote economic development by allowing duty-free entry for thousands of products from designated beneficiary countries both developing and developed countries. Under it, a wide range of industrial and agricultural products originating from certain developing countries are given preferential access to US markets. India’s case, GSP enables duty-free entry of 3,500 product lines in US markets, which benefits exporters of textiles, engineering, gems and jewellery and chemical products. The total US imports under GSP in 2017 was $21.2 billion, of which India was biggest beneficiary with $5.6 billion, followed by Thailand ($4.2 billion) and Brazil ($2.5 billion).  The US Congress in March 2018 had voted to renew GSP through 2020. In

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India receives first US LNG shipment at Dabhol under long-term deal

India received its first Liquid Natural Gas (LNG) cargo from United States (US) under long-term supply deal. The first US-sourced LNG shipment was imported by state-owned GAIL on board of its chartered LNG ship ‘Meridian Spirit’ from Cheniere Energy’s Sabine Pass LNG export facility in Louisiana. It was discharged at GAIL’s Dabhol terminal, Maharashtra after 25 days voyage. The development comes on heels of India’s first import of crude oil from US in October 2017.

Background

GAIL has signed two 20-year Sale Purchase Agreement (SPA) potentially worth US $32 billion with US’ natural gas exporter Dominion Cove Point project in Maryland and tSabine Pass project in Louisiana. Under it, GAIL will purchase around 3.5 Million Tonne of LNG per year from Sabine Pass. This shipment will help GAIL to diversify its portfolio both on price indexation and geographical locations.

Background

India primarily imports LNG from Qatar and Australia under long-term contracts. In recent times, it has been trying to diversify its natural gas sources. Moreover, after former US President Barack Obama lifted US’s 40 year-old oil export ban, Indian oil and gas companies in response bought shipments of US crude to check for cost competitiveness and its compatibility with Indian refinery configuration. India is also trying to increase its use of natural gas in the energy mix from current 6% to 15% within five years inorder reduce dependence on oil and to secure energy supplies and reduce emissions by using more natural gas.

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