Generalised System of Preferences

Concept:  Generalised System of Preferences
Topic: International Relations
Category: India and its neighborhood- relations
CNA mentions: 1 (Feb 27)

Generalized System of Preferences (GSP) is a preferential tariff system under which developed nations extend reduced MFN tariffs (Most Favoured Nation) or duty-free entry of certain goods into their markets, to the developing nations. The developed countries, or the countries that extend this trade preference are called donor countries, and the benefit-receiving countries are called beneficiary countries.

The GSP is an exemption from the MFN principle under which the WTO members are obliged to treat all other WTO members equally as their ‘most favoured’ trading partner-nation. GSP benefits Indian exporters indirectly through the benefits that are gained by the importers via reduced tariffs and/or duty-free entry. It also helps new exporters find a new market and established exporters to improve margins in a donor country. At present, 29 developing countries including the EU extend GSP to India.

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