US withdraws favoured trade status to India under GSP programme; many Indian products now can’t enter US markets duty-free

The United States has withdrawn India’s preferential trade status for India. The Trump administration ended India’s classification as a beneficiary developing nation under the key GSP trade programme. The US said it took this measure after ascertaining that India has not assured the United States that it will provide fair and reasonable access to its markets.

The Generalised System of Preference (GSP) is the largest and oldest US trade preference programme and is designed to encourage economic development by allowing duty-free entry for thousands of products from selected beneficiary countries.

“I have determined that India has not assured the US that it 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 an announcement on Friday, snubbing the plea made by several top American lawmakers as it will cost American businesses over $ 300 million in additional tariffs every year.

On March 4, Trump declared that the US aims to stop India’s designations as a beneficiary developing country under the GSP programme. The 60-day notice period ended on May 3.

The Trump administration has prioritised working with the government of India to ensure that US companies have a level-playing field, a senior State Department official told reporters on Thursday, hours after Narendra Modi was sworn in as prime minister for a second time following his spectacular electoral victory in the general elections.

Under the GSP programme, nearly 2,000 products including auto components and textile materials can enter the US duty-free if the beneficiary developing countries meet the eligibility criteria established by Congress.

India was the largest beneficiary of the programme in 2017 with $ 5.7 billion in imports to the US given duty-free status and Turkey the fifth largest with $ 1.7 billion in covered imports, according to a Congressional Research Service report issued in January.