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India is keen to re-start its stalled trade talks with the US and is considering asking the country to postpone withdrawal of the Generalised System of Preferences scheme for Indian exporters by two-three months beyond May, a government official said.
The idea is to have some time in hand to address American concerns in the areas of market access and convince it to retain the popular scheme that allows exporters of more than 3,000 items duty-free access to the US market.
“A letter is likely to be sent from the Commerce Ministry to the US Trade Representative (USTR’s) office asking for deferment of GSP withdrawal and re-start of talks. India is also planning not to impose retaliatory duties on US goods on April 1 for America’s unilateral action against Indian steel and aluminium and postpone implementation further,” a government official told BusinessLine .
US President Donald Trump had written to Prime Minister Narendra Modi last month stating that his country would discontinue the GSP scheme for Indian exporters as India had not opened its markets enough for Americans.
The announcement had disappointed the Commerce Ministry as it had hoped that both countries were on their way to a friendly resolution of differences over market access issues and a trade agreement could be signed soon. The GSP withdrawal is scheduled to take place in the first week of May.
“The US wants India to address the price cap issue for medical devices, provide greater market access for dairy and agricultural products and also reduce high import tariffs for mobile phones. India, on the other hand, wants the US to remove the unilateral import duties on steel and aluminium, remove non-tariff barriers for farm products and continue the GSP scheme. India feels that a deal is feasible,” the official said. Although initially, the Commerce Ministry had written to the PMO proposing that it should get in touch with the US for a re-start of trade talks and deferment of GSP withdrawal, the PMO said that it is the Ministry that should take the initiative, another official said.
Postpone retaliatory tariffs
India is also likely to further postpone the implementation of retaliatory tariffs on about 29 American goods that was announced in June last year in response to imposition of penal tariffs of 25 per cent on steel and 10 per cent on aluminium by the US. The retaliatory tariffs are supposed to come into force from April 1 2019.
“The US has to realise that India is a trustworthy partner and is the only nation that has responded to its demand of increasing imports of American products to improve trade imbalances,” he added.
The trade deficit between India and the US bridged by almost 6 per cent in 2017 to $22.9 billion, according to the ‘Trade Estimate 2018’ released by the USTR earlier this year.
New Delhi bought oil and gas from the US for the first time in 2018 worth an estimated $3 billion and is willing to purchase more in 2019 which will reduce the deficit further. The US was India’s top export destination in 2017-18 with shipments valued at $47.88 billion. India’s imports from the country were worth $26.61 billion.
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