US President Donald Trump terminates preferential trade status for India under GSP

  1. The USA has terminated India’s designation as a beneficiary developing nation under the Generalized System of Preferences (GSP) programme. The US has terminated India’s designation as a beneficiary under GSP highlighting concerns over India not allowing equitable and reasonable access to its markets.
  2. The decision of U.S comes in the backdrop of issues like (a) India’s new rules on e-commerce that affected firms such as Amazon and Walmart (b) Data localisation rules which forced foreign companies to store their data locally (c) Price controls on medical devices (Cardiac stents) (d) Tariff on ICT products such as smart watches and high end mobile phones (e) Lack of greater market access for the US dairy industry and (f) Trade imbalance between India and the US.
  3. GSP is a preferential tariff system extended by developed countries to developing countries. It is a preferential arrangement in the sense that it allows concessional low/zero tariff imports from developing countries.
  4. Countries like the United States and United Kingdom, as well as the European Union give GSPs to imports from developing countries. The objective of GSP is to give development support to poor countries by promoting exports from them into the developed countries.
  5. The GSP of US provides preferential duty-free entry for up to 4,800 products from 129 designated countries. According to World Bank data, India is currently the largest beneficiary of the US’s GSP programme in 2017 with $5.7 billion in imports to the US given duty-free status

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