The Withdrawal of benefits under the Generalized System of Preferences (GSP) will affect exporters of gems & jewellery the most, according to Crisil report.

India's goods and services trade with the US totalled USD 142.1 billion of which, exports were USD 83.2 billion. Within exports, that under GSP is estimated to be 7.5-7.8%, which translates into USD 260 million of levies saved, that amount to a 4% duty benefit in 2018.

Director of Crisil Research Hetal Gandhi said, ''The withdrawal of GSP will affect exporters of gems & jewellery the most because 15% of such exports availed of its benefits in calendar 2018. Now there will be an additional duty of 7% on exports of precious metal-based and imitation jewellery. That will reduce competitiveness of domestic exporters and put pressure on margins.''

The gems & jewellery sector is already under pressure on account of stringent lending rules and working capital crunch. India tops the list of exporters to the US in this category, with more than 15% share. However, increasing competition from Israel, Mexico and Canada remains monitorable.

Indian companies also face intense competition for exports of pharmaceutical products to the US from the likes of Ireland, Germany and Switzerland. The US market accounts for 35-37% of Indian formulation exports. However, the impact of GSP withdrawal on pharmaceuticals is minimal.