Under AGOA, Mauritius Invites Indian SMEs to Benefit from Duty-Free Exports

Under the African Growth and Opportunity Act (AGOA), Mauritius will provide duty-free export access to Indian Small and Medium Enterprises (SMEs) starting in 2024. This change can be very advantageous for Indian exporters who want to use the preferential trade deal through Mauritius to reach the U.S. market.

According to an ambassador, Mauritius is extending an invitation to Indian Small and Medium Enterprises (SMEs) to establish their operations on the island nation in order to take advantage of the African Growth and Opportunity Act’s (AGOA) duty-free export benefit. 
According to him, this AGOA allows duty-free shipping to the US market, which presents enormous prospects for Indian companies.

In response to a query, Haymandoyal Dillum, the High Commissioner of Mauritius to India, stated, “Indian industries should make the most of the AGOA agreement with African countries and the US.”  Dillum urged the leather industry to investigate value-added options in Mauritius to obtain a competitive edge in the US market. Dillum was in Kolkata on Saturday to attend a Bharat Chamber of Commerce session.

What’s the AGOA?

A 2000 trade law known as the African Growth and Opportunity Act (AGOA) was created by the US to improve market access for Sub-Saharan African nations that meet the requirements. More than 6,400 goods, including textiles, clothing, agricultural products, and machinery, are eligible for duty-free access under AGOA. As a major AGOA member, Mauritius provides a crucial entry point into the U.S. market because of its well-established infrastructure and friendly trading climate.

How Indian Small and Medium Enterprises Can Gain

Mauritius is actively enticing Indian small and medium-sized enterprises (SMEs) to benefit from the AGOA by exporting their products to the United States via Mauritian trade routes. The following are a few of the main benefits for Indian SMEs:

1. Duty-Free Access to American Markets: Indian SMEs can export a variety of goods, including electronics and textiles, to the United States without having to pay exorbitant tariffs. As a result, Indian products are now more competitive in the US market.
2. Strategic Location: Mauritius’s location as a significant trading hub in the Indian Ocean makes it a perfect entry point for companies doing business with India. The island nation’s ports, logistics, and infrastructure are all well-established and able to manage large export volumes.
3. Simplified Trade Process: Mauritius offers a streamlined export-import process for businesses partnering under AGOA, allowing Indian SMEs to focus on scaling their operations rather than dealing with bureaucratic hurdles.
4. Diversification of Export Markets: By utilizing the Mauritius route, Indian SMEs can expand beyond traditional markets and enter the U.S., which remains one of the largest consumer markets in the world.

Due to the economy’s downturn following the COVID-19 outbreak, the West Bengal leather industry has been experiencing a slowdown in traditional markets including the US and Europe. 
West Bengal exports about Rs 6,000 crore worth of leather products. This labor-intensive industry frequently imports unprocessed skins from African nations.  On the other hand, the 2000-launched AGOA program is set to end in 2025. The island nation brought attention to the expanding possibilities of local currency exchange with India.

KEYPOINT: The INR-Mauritian Rupee trading mechanism is presently being piloted in Mauritius, and in the upcoming years, it is anticipated to gain speed. Regarding the expansion of bilateral trade in local currencies, Dillum voiced optimism. According to him, Mauritius banks have opened Vostro accounts with Indian banks, and the central banks of both nations are keeping a careful eye on the initiative’s progress. An account maintained in the local bank’s currency by a domestic bank on behalf of a foreign bank is known as a Vostro account. Mauritius implemented the Unified Payment Interface (UPI) payment system in February.

Important Markets for Indian SMEs

This project can be especially beneficial to the following sectors:

1. Textiles and garment: No barriers are preventing Indian textile producers from entering the important American garment market.
2. Agriculture: Small and medium-sized enterprises (SMEs) that deal with tea, coffee, spices, and organic products may be able to reach new American consumer demographics.
3. Manufactured Goods: AGOA’s broad product scope is advantageous for industries including machinery, auto components, and electronics.

How Indian SMEs Can Benefit from AGOA

1. Assist Mauritius-Based Organisations: To comply with AGOA regulations, Indian SMEs can work with Mauritius businesses. This may entail forming distribution networks in Mauritius or forming collaborative partnerships.
2. Meet AGOA Compliance Standards: Exporters are required to make sure that their products satisfy the requirements of the AGOA, including eligibility requirements and rules of origin. To guarantee adherence to these regulations, Mauritius offers guidelines.
3. Take Advantage of Mauritius’ Export Processing Zones (EPZs): SMEs might investigate Mauritius’ EPZs, which provide benefits like tax exemptions and duty-free imports of raw materials.

In summary

The invitation extended by Mauritius to Indian SMEs to benefit from duty-free exports under the AGOA in 2024 offers a fantastic chance for companies to grow in the American market. Through increased profitability, decreased trade restrictions, and market diversification, this collaboration may help India’s SME sector.

Since Mauritius is a gateway to the United States, Indian SMEs ought to think about utilizing this opportunity to the fullest by forming alliances and making sure AGOA requirements are followed. This calculated approach could provide India’s booming SME sector with a boost in growth and global competitiveness.