Trump plans to scrap preferential trade treatment for India

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The Indian government on Tuesday downplayed the effect of the US decision to withdraw trade concessions granted to India under the Generalised System of Preferences (GSP), with Commerce Secretary Anup Wadhawan saying that the impact would amount to only $190 million on the value of $5.6 billion in exports to the USA that fall under the GSP category.

U.S. President Donald Trump's attempt to pressure India on trade may be intended as a symbolic shot across New Delhi's bow, but its inopportune timing threatens broader political consequences.

President Donald Trump said India has failed to assure the United States it will provide reasonable access to its markets. The US imported goods worth $5.6 billion from India in 2017 under the programme aimed at helping developing economies.

India is the largest beneficiary of the GSP exporting goods worth $5.6 billion to the United States under the programme.

"I will continue to assess whether the Government of India is providing equitable and reasonable access to its markets, in accordance with the GSP eligibility criteria", he said.

India makes use of concessions on about 1,800 products of the 3,700 the GSP covers and goods from sectors such as chemicals and engineering are exempt from U.S. tariffs under the scheme. "The TPP was dismissed, just as trade links with India and Turkey now appear set to be discarded", he said.

The U.S. decision follows a review process of India's GSP status-alongside those of Indonesia and Kazakhstan-that the USTR's office undertook in April 2018.

"Economic value of GSP benefits are very moderate".

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In June 2018, India had made a decision to levy higher tariffs on products such as almonds, apples and phosphoric acid in retaliation to the USA unilaterally raising customs duties on certain steel and aluminium products.

The GSP programme allows duty-free entry of around 1,900 products from India into the USA, benefiting exporters of textiles, engineering, gems and jewellery and chemical products. "In some cases, there were genuine cultural concerns like dairy products, where too we were trying to see how we could work with them".

Many trade experts contend that India - one of the largest economies in the world - may have graduated out of the program meant for the least-developed countries.

The decision came as Washington and Beijing seek to negotiate an exit to the Trump administration's most high-profile and costly trade battle.

President Donald Trump sent letters to Congress and the Turkish and Indian governments to notify them of the changes, setting off a 60-day countdown after which they will take effect via presidential proclamation.

Under what is known as the Generalised System of Preferences or GSP, India enjoys duty-free entry for up to Dollars 5.6 billion worth of its exports to the United States.

Sachin Chaturvedi, director general at Research and Information System for Developing Countries (RIS), said India must prepare to take a firm stance against the US.

However, sources said the government will nevertheless try and convince the Trump administration to review the GSP benefits granted to India, as this will impact some of the labour-intensive sectors, which, in turn, will eat away certain jobs.