The US decision to withdraw the tariff concessions made available to India under the Generalised System of Preferences (GSP) has prompted the Commerce Ministry to deliberate upon whether it should finally impose retaliatory duties on US goods that it had announced in June 2018 but deferred several times.
“There are discussions on putting off retaliatory duties scheduled to be implemented on April 1 by about a month till early May. If the US goes ahead with its decision to withdraw GSP in May as planned, India can simultaneously impose its retaliatory duties although the two are not related,” a government official told BusinessLine. The United States Trade Representative’s office (USTR) had announced on Monday the government's decision to withdraw GSP status for India which allowed duty-free access for about 3,500 items from India into the American market.
Although India was the largest beneficiary of the scheme designed for developing countries with about $5.6 billion of its exports getting covered in 2017-18, the government said the actual benefit was much lower at about $190 million. The withdrawal will take effect in 60 days.
“India was taken aback by the decision to withdraw GSP as it had been working on a substantial trade package for the US that would have taken care of many concerns voiced by the US industry,” the official said.
The withdrawal follows a review initiated last year by the USTR against India on the basis of complaints of market access problems made by the US dairy and medical equipment industry and which subsequently included numerous other issues such as IT and telecom.
New Delhi wants to continue its discussion on bilateral trade issues with Washington. “Because of all the efforts that were being made by India to accommodate America’s interests, it is hopeful that the US government may change its mind on the matter. The broad idea is that if the US withdraws the actual benefits from India in 60 days, India should also not spare any thoughts for the American industry and impose its long planned duties on aluminium,” the official said.
US penal import duties
India’s retaliatory duties will be in response to penal import duties of 10 per cent on aluminium and 25 per cent on steel imposed by the US last year on a group of countries, including India, citing security threat. New Delhi announced its decision to impose retaliatory duties on 29 American products in June 2018 but has been postponing the intended implementation. The new date for implementing the retaliatory duties is April 1.
The US was India’s top export destination in 2017-18 with shipments worth $47.88 billion. India’s imports from that country were worth $26.61 billion.