New Delhi: India on Monday decided to defer for the third time tit-for-tat retaliatory tariffs against 29 American products worth $235 million that were to come into effect on Tuesday to counter the US move to unilaterally raise import duties on Indian steel and aluminium products, said a person with knowledge of the development.

The two countries are constructively engaged in finding a solution and hence the tariff hikes have been deferred until 3 November, said a government official.

India on 20 June notified that it will raise tariffs on 29 US products, including almonds, apples and phosphoric acid worth $10.6 billion imports in retaliation to the steel and aluminium tariff hikes by the US. India did not impose the tariffs immediately, unlike other major trading parters of the US as the two countries were engaged in bilateral negotiations to finalize a trade package to douse tensions. The duty hikes were then to come into effect on 4 August, but India yet again deferred implementation by 45 days till 18 September.

India and the US signed the Communications Compatibility and Security Agreement, which is one of the four foundational pacts the US signs with allies and close partners to facilitate interoperability between militaries, at the first-ever “2+2" dialogue in New Delhi, signalling a new chapter in bilateral defence and strategic relationship.

However, on the trade front, both sides continue to blow hot and cold. India is negotiating a trade package with the US and has been demanding a waiver on tariff hikes similar to the ones the US granted to Argentina, Brazil and South Korea. US President Donald Trump, who has accused India of practising unfair trade, recently said he wants to end subsidies to countries such as India and China.

Mint reported on 10 September that India has turned down a Trump administration offer to waive tariff hikes on steel and aluminium in exchange for India capping exports of these items at 70% of its total exports to the US last year. India’s exports of steel items to the US fell 42% in the June quarter, affected by sanctions slapped by the Trump administration, invoking national security, even as exports of aluminium items to the US, facing similar sanctions, jumped 59%, Mint reported on 3 September.

India has taken the view, like many other countries, that the measures by the US are safeguard measures though they are in the name of national security. It has claimed that steel and aluminium exports worth $1.2 billion to the US have been hit post the tariff hike, with the US collecting additional tariffs of $241 million.

After the US rejected India’s request for an immediate waiver, India dragged it to the World Trade Organization (WTO). Other countries and groupings that raised the issue at WTO include China, the European Union , Canada, Switzerland, Russia, Norway and Mexico.

The US Trade Representative is reviewing the generalized system of preferences (GSP) eligibility of India, after the US dairy and medical device industries requested a review of India’s GSP benefits, given its alleged trade barriers affecting US exports in these sectors.

The GSP programme allows duty-free entry of 1,937 products worth $5.6 billion from India into the US, benefiting exporters of textiles, engineering, gems and jewellery, and chemicals. The US has been trying to leverage the GSP review to gain more market access in India.

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