Chennai: In a move that would affect $5.6 billion export goods from India to US, the American government is reportedly looking at ending zero tariff concessions to Indian products under the Generalised System of Preferences (GSP) to force India to change its trade and investment policies.
Such a move would further make matters worse between the two nations, reports have stated. It would also affect India the most as the country is the largest beneficiary of the scheme that has been in force since the 1970s.
The developments are said to have come in response at a time when India has put its new e-commerce rules in place. The rules restrict the way Amazon and Walmart do business in India.
US President Donald Trump has vowed to reduce the US trade deficit with large economies and has repeatedly called out India for its high tariffs.
According to reports, the problem lies in the fact that India and the US are both looking to pitch themselves as manufacturing hubs and generate jobs on that basis.
According to a Reuters report, the GSP was tied to the trade package and since that deal had slipped further away, the United States is considering withdrawing or scaling back the preferential arrangement.
The US Trade Representative (USTR) was completing a review of India’s status as a GSP beneficiary and an announcement was expected over the next two weeks, it said.
With the e-commerce war, according to the government, e-commerce companies were operating at three levels to offer deep discounts and were booking losses in their books.
The government also laid bare the nature of irregularities the two major e-commerce companies Amazon and Flipkart are involved in, while flouting the FDI rules and said its decision to review FDI policy for retailers has its roots in the flouting of rules by the two companies to secure a larger share of the market, reports said.
The government in a recent explanatory release also made it clear that it stood firm in its decision to stick to the deadline set by it for the online firms to adhere to the guidelines.
Moreover, the US government might also look at hitting back at India’s move on keeping data within India and imposition of higher tariffs on electronic products.
The US goods trade deficit with India was $22.9 billion in 2017, a 6.1 per cent decrease over 2016, according to the Office of the US Trade Representative.
India plans to reduce the gap with higher levels of energy and aircraft purchases. The trade deficit is expected to shrink by $6-7 billion and as and when aircraft deliveries happen, the commerce department expects another $4-5 billion reduction in the trade gap every year.
| No intimation |
| The Indian govenment has not formally received any information on the US ending preferential benefits for $5.6 billion worth of Indian exports, reports quoted a senior official to have said.
“We have not received any communication from them that they want to pull the plug on this programme. It is non-reciprocal, non-discriminatory and a unilateral prerogative of the US,” the official was quoted as saying by a media entity. “This has been an ongoing issue and stems from their concern on the trade deficit, which has been declining,” the report quoted. |