India-US Trade Issues

Question: In near future US would review the eligibility of Indian products for preferential or duty-free access to its market under the-
(a) Generalized System of Preferences Programme
(b) Normalized System of Preferences Programme
(c) Specialized System of Preferences Programme
(d) None of the above
Answer :(a)
Related facts:

  • On 5 March, 2019 United States of America has given a 60-day withdrawal notice to India on the Generalized System of Preferences (GSP) benefits extended by US (United States).
  • Since the review initiated by the US (United States) in April 2018 on India’s GSP benefits, India and US (United States) have been discussing various trade issues of bilateral interest for a suitable resolution on mutually acceptable terms.
  • GSP benefits are envisaged to be non-reciprocal and non-discriminatory benefits extended by developed countries to developing countries.
  • In India’s case the GSP concessions extend by the US (United States) amounted to duty reduction of only USD 190 Million per annum.
  • The US (United States) had initiated the review on the basis of representation by the US (United States) medical devices and dairy industries, but subsequently included numerous other issues on a self-initiated basis.
  • Any MFN (Most Favoured Nation) duty reduction would almost entirely benefit third countries. Accordingly, India conveyed willingness to extend duty concessions on specific items in which there is a clear US (United States) interest.
  • On telecom testing, India was willing to consider discussions for a Mutual Recognition Agreement.
  • Due to various initiatives resulting in enhanced purchase of US goods like oil and natural gas and coal the US trade deficit with India has substantially reduced in calendar years 2017 and 2018.
  • Earlier in 2018, the reduction is estimated to be over USD 4 billion with further reduction expected in future years on account of factors like the growing demand for energy and civilian aircrafts in India.
  • India’s trade weighted average tariffs are 7.6% which is comparable with the most open developing economies and some developed economies.


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