Geneva: The US wants to capture the Indian market for dairy products and medical instruments, while preparing the ground to discontinue benefits of around $6 billion for Indian textiles and leather products under the generalized system of preferences (GSP) scheme, according to people aware of the development.
India, which is largely self-sufficient in the production of dairy products following the “Operation Flood” and “White Revolution” launched by Verghese Kurien in 1970, is now the prized target for American dairy products for the Trump administration, said a trade analyst, who asked not to be identified.
The US also remains determined to increase its exports of high-end medical equipment to India, the analyst said. “Both dairy and medical equipment are top priorities for the US in the Indian market,” the analyst said last week.
Given the large size of the India dairy market due to growing demand from the middle classes, the US reckons that India can be a lucrative destination for its dairy sector.
Also, India’s increasing disease burden as well as the rapid privatization of the health sector offers a huge market for American medical equipment makers, the same analyst said.
Despite its ambitious drive to turn India into a win-win destination for American dairy products and medical equipment, the US is in no mood to relent on its current hard line positions to terminate benefits offered to the Indian textile and leather exports under the GSP scheme.
The developing and the least-developed countries are allowed to export textiles, leather and other products on a preferential tariff framework by industrialized countries on an MFN (most-favoured-nation) basis that requires all partners be treated on an equal footing.
The donor countries—the US, the European Union (EU), and Japan, among others—want to discontinue the MFN framework that would allow equal treatment for all countries for GSP benefits and introduce “differentiation” wherein they will decide which countries can avail of GSP benefits on their conditions.
In a separate development, India signalled to the US at the World Trade Organization (WTO) on Friday that New Delhi may impose trade retaliatory measures to the tune of $165.56 million on a range of sensitive American farm products from 21 June if the Trump administration makes its controversial duties on steel and aluminium products from India permanent.
The US enacted tariffs of 25% on steel and 10% on aluminium against all countries, invoking national security considerations.
Several countries—China, the EU, India, Russia, and Thailand, among others- called upon the US to enter into safeguard consultations. The US, however, rejected the calls from China, the EU, India, and other countries.
In a four-paged notification filed with the WTO’s Council for Trade in Goods, India notified the US that it “proposes to suspend concessions and other obligations” to the US on a range of American agricultural products due to the steel and aluminium safeguard duties. India said the US’s duties amount to definitive safeguard steps despite the US’s rejection that measures imposed under security considerations are not safeguard duties.
“India believes the measures taken by the US are not consistent with its obligations under the relevant provisions of the GATT 1994 and Safeguards Agreement.”
India said its proposed additional duties on American products will come into effect on 21 June “in case the US decides to continue the period of application of the measures in accordance with Article 7 of the Agreement on Safeguards.”
The US said it will decide whether to make the steel and aluminium duties permanent by 31 May.
Significantly, India has targeted American walnuts (100% additional duty), cashew nuts and almonds (10%), apples fresh (30%) and several other products between 10% and 20%.
The European Union also signalled its intention to impose trade retaliatory measures in case Washington makes the steel and aluminium duties permanent.