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Growing protectionism may hit engineering exports

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.

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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.
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