After the US president Donald Trump through a presidential proclamation withdrew duty free benefits to Indian exporters worth $6 billion, Indian government on Saturday termed the move unfortunate and vowed to protect the country’s national interest.
“I have determined that India has not assured the United States that India will provide equitable and reasonable access to its markets. Accordingly, it is appropriate to terminate India’s designation as a beneficiary developing country effective June 5, 2019," Trump said in his proclamation.
Several members of the US Congress and US manufacturers had urged Trump not to withdraw GSP benefits available to India since India is a strategic ally and the move will increase input costs for American producers.
The Indian trade ministry in a statement said India as part of our bilateral discussions had offered resolution on significant US requests in an effort to find a mutually acceptable way forward. “It is unfortunate that this did not find acceptance by the US. India, like the US and other nations, shall always uphold its national interest in these matters. We have significant development imperatives and concerns and our people also aspire for better standards of living. This will remain the guiding factor in the government’s approach," it said.
The statement however also struck a conciliatory note holding that India will continue to build on its strong ties with the US and resolve “ongoing issues" on economies ties. “We are confident that the two nations will continue to work together intensively for further growing these ties in a mutually beneficial manner," it added.
The US in March announced its decision to withdraw the preferential duty benefits named Generalised System of Preferences (GSP) to India after talks between the two sides broke down on “disproportionate" demands by the US side. However, the US deferred implementing the GSP withdrawal given the ongoing general elections in India. This had raised hopes that the two sides may engage again to resolve the differences after Modi government took charge on Thursday.
On Friday, India’s new trade minister Piyush Goyal who replaced Suresh Prabhu took charge in Udyog Bhawan. S. Jaishankar who was earlier ambassador to the US has also taken charge as the new external affairs minister, amid growing trade tensions with the US. India has repeatedly delayed the retaliatory tariffs announced on 29 US products against the increase in tariff on steel and aluminium by the US. With the current deadline ending on 16 June, Goyal has to decide whether India should now impose the tariff hikes on US products or not.
Trump also removed India from the list of developing country WTO Members exempt from application of the safeguard measures on certain crystalline silicon photovoltaic (CSPV) products and large residential washers.
The US commerce secretary Wilbur Ross during his visit to India last month to attend the 11th Trade Winds Business Forum and Mission had listed out alleged unfair trade practices by India, including on data localization, price control on medical devices and higher tariff on telecommunication equipment. India has time and again denounced Trump’s charge of being a “tariff king" and has maintained that its tariff levels are in accordance with WTO rules applicable to developing countries. The US however wants countries like China and India to give up their “developing country" status given their rapid economic progress.