US President Donald Trump’s announcement that he is ending India’s $5.6 billion trade concessions under the Generalised System of Preferences (GSP) programme, accusing New Delhi of not providing Washington “equitable and reasonable access” to its market is typical of his tendency to browbeat trade partners.
The President who is on a mission to expand marker access abroad and end trade deficits, made the announcement on Monday in a letter to House Speaker Nancy Pelosi and Vice President Mike Pence in his capacity as the Senate President.
The US Trade Representative’s Office said that the preferences will end in 60 days after the notification to Congress and the Indian government. India’s duty-free exports to the US under GSP are 12 per cent of total exports to the US. Duty benefits under the programme totalled $190 million or 3.4 per cent. GSP benefits were availed by 13 sectors with 1,900 products exported under the scheme out of eligible 3,700 products.
Among the key sectors that would get impacted by the withdrawal are machinery and parts, iron and steel articles, chemicals, pesticides, and electrical machinery. A large number of products are inputs for the downstream industries and hence could impact them.
There is no denying that this move would substantially dent the exporters operating margins. While India would strenuously strive to get the US to relent, it would have to start exploring options of retaliatory tariffs and newer markets if no settlement comes about.