After imposing trade tariffs against Chinese goods, US President Donald Trump has made its intention clear to end trade preferential for India. It is not good news for Modi government and service providers of India. Trump made it clear that Indian government failed to convince the Trump administration to provide “equitable and reasonable” access to its markets.
President Trump wrote a letter to Congress about his intention. Trump said that “I am providing notice of my intent to terminate the designation of India as a beneficiary developing country under the Generalized System of Preferences (GSP) program.”
I am taking this step because, after intensive engagement between the United States and the Government of India, I have determined that India has not assured the United States that it will provide equitable and reasonable access to the markets of India”.
The Trump administration has been working to end India’s participation in the Generalised System of Preferences (GSP) program since April 2018. The US launched the review into India’s eligibility for GSP program a year ago. Trump has been accusing India for taking undue advantage of GSP program and not doing enough to reduce trade deficit.
India is a very high tariff nation,” Trump told the Conservative Political Action Conference on Saturday. “When we send a motorcycle to India, they charge 100 per cent tariff. When India sends a motorcycle to us, we charge nothing I want a reciprocal tax, at least I want to charge a tax”.
The US-Indian tensions escalated in June last year, when Washington slapped the country with 25 percent tariffs on steel and 10 percent levies on aluminum. In response, New Delhi accused Washington of unfair trade practices and threatened to retaliate by slapping tariffs on $1.4 billion of US goods. The trouble in trade relations with US could prove problematic for India, for which the US serves as its second largest export market with 16 percent.
The Indian exports to US will hurt if Trump imposed tariffs on Indian goods and services. The Indian IT industry will be hit hard. Trump wants to use the GSP to India as a bargain chip to get more access to the Indian market for American goods.
According to World Bank, in 2017, India’s GDP was an estimated $2.6 trillion, real GDP growth was 6.7%; and the population was 1.3 billion.
U.S. goods and services trade with India totaled an estimated $126.2 billion in 2017. Exports were $49.4 billion; imports were $76.7 billion. The U.S. goods and services trade deficit with India was $27.3 billion in 2017.
India is currently our 9th largest goods trading partner with $74.3 billion in total (two way) goods trade during 2017. Goods exports totaled $25.7 billion; goods imports totaled $48.6 billion. The U.S. goods trade deficit with India was $22.9 billion in 2017.
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17 August, 2019