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Growing protectionism may hit engineering exports
Why is it in the news ?
- According to the erstwhile Engineering Export Promotion Council (now EEPC India),engineering exports may slip by about $5 billion due to increased protectionism in the U.S. and Europe.
- Target set for this fiscal(FY19) is $90 billion.
- EEPC is the apex body of engineering exporters.
More in the news
According to the EEPC officials,
- Against a target of $90 billion for FY19, India may end the year with lower exports, say around $85 billion.
- Measures by the US, including an increase in import duty on steel and aluminium products, have already had an adverse impact on exports.
- Previously, duty on steel imports from India was in the range of 0-6 per cent.
- Other markets like Europe, which exporters were looking at for increased shipments -too imposed anti-dumping duties on different products like steel tubing and piping.
GSP issue
- The US had, earlier this month, revoked duty free concessions on at least 50 Indian products, mostly from the handloom and agricultural sectors.
- As ambiguity persists, smaller exporters have been worst hit and may lose out on orders to companies in Vietnam or Cambodia.
- GSP provides duty-free entry into the US market for over 3,400 exports from designated beneficiary developing countries.
What is Protectionism?
- Protectionism refers to government actions and policies that restrict or restrain international trade, often with the intent of protecting local businesses and jobs from foreign competition.
- Proponents of protectionism argue that the policies provide competitive advantages and create jobs.
- Protectionist policies can be implemented in four main ways :1. Imposing tariffs to imported goods to raise the price of imports to equal or exceed local prices.2. Limiting the quantity of imported goods by setting quotas ( non-tariff barriers ).3. Product standards : Limitations based on product standards are implemented for a variety of reasons, including concerns over product safety, sub-standard materials or labeling.4. Government subsidies : Governments can help domestic businesses compete by providing subsidies, which lower the cost of production and enable the generation of profits at lower price levels.
Source
The Hindu.