Home/ News / World/  US may review GSP policy after new govt takes over

NEW DELHI : The US may wait until a new government takes charge in New Delhi before it takes a call on withdrawing duty-free benefits to Indian exporters, or consider further negotiation on the issue.

The Donald Trump administration had decided to withdraw the generalised system of preferences (GSP) benefits worth $5.6 billion to Indian exporters in March. However, it did not implement the decision through a Presidential proclamation after the 60-day deadline ended on 2 May.

“Though it was not an assurance, visiting commerce secretary Wilbur Ross indicated that the US is aware that the current government cannot take any policy decisions and any movement on GSP will happen after the results of the ongoing general elections are announced on 23 May," a trade ministry official said, requesting anonymity.

Ross is in India to attend the 11th Trade Winds Business Forum and Mission hosted by the US Department of Commerce.

In his speech at the event on Tuesday, Ross listed out alleged unfair trade practices by India, including on data localization, price control on medical devices and higher tariff on telecommunication equipment. He, however, hinted that the US will wait for the new government at New Delhi to address its concerns.

“We applaud India’s commitment to addressing some of these barriers once the government is re-formed in the month of June," Ross said.

Highlighting the alleged high tariff rates in India, Ross said India’s average applied tariff rate of 13.8% remains the highest in any major world economy. “It has, for example, a 60% tariff on automobiles; it has a 50% (tariff) on motorcycles; and 150% on alcoholic beverages. Its bound tariff rates, namely the highest rate they can charge, on agricultural products average an incredible 113.5%, and some are as high as 300%. These are not justified percentages. They are way too high."

Trade minister Suresh Prabhu, in response, told the gathering that India will never pose a “strategic challenge to the US as the two are strategic allies". “Issues between the two countries can be sorted out through talks," he added.

India has often denounced the “tariff king" charge by President Trump pointing out that its duties were well within the permissible limits prescribed by the World Trade Organization, which was arrived at through a complex negotiating process of give-and-take among developing and developed nations.

It has also pointed out that the highest tariffs imposed by Japan (736%), South Korea (807%), the US (350%) and Australia (163%) are much higher than that of India. While India’s average tariff at 13.8% is higher than the US’s at 3.4%, but it is almost on a par with South Korea’s 13.7%.

India has repeatedly delayed the retaliatory tariffs announced on 29 US products against the increase in tariff on steel and aluminium by the US. While the current deadline ends on 15 May, the trade ministry official, quoted earlier, said the government is contemplating to further extend it by another 15 days.

While India’s goods exports to the US grew about 12% to $54.4 billion in 2018, US goods exports to India rose about 28% to $33 billion last year.

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Updated: 08 May 2019, 12:15 AM IST
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