India may lose zero-tariff benefits on exports to US

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India has been enjoying a vital US trade concession — its exports worth $5.6 billion to the US enjoy zero tariff. That may be consigned to history, as US President Donald Trump intends to withdraw the Generalised System of Preferences (GSP) from India. This has been in place since the 1970s and India has been the largest beneficiary of this trade package.

Ever since he assumed office in 2016, Trump has vowed to reduce US deficit with large economies. The GSP withdrawal would be his most punitive action ever against India. He has repeatedly spoken out against India’s high tariffs on US exports to India.

Prime Minister Narendra Modi has invited foreign investment in the manufacturing sector in India, as part of his “Make in India” campaign, which was launched with an objective to create job for crores of youth that have completed their education.

Donald Trump, with his “Make America Great Again” campaign, has urged US companies to return to manufacturing in the US.

The Indian government brought in a new rule that the e-commerce sector has termed as “restrictive”. Also, the government wanted global card payments companies to move the payments-related data to India.  High tariffs on electronic items and smartphones have also made things tough for the trade package negotiations.

The GSP depended on the trade package and some say that the GSP could be on its way out. The US government is expected to complete a review of India’ status as a GSP beneficiary and would announce in about a fortnight.

While India and the United States continue developing close political and security tie, they are drifting apart regarding the bilateral trade aspect.