India weighing option of imposing retaliatory duties on US goods

India is considering the option of imposing retaliatory import duties on certain identified products from the US such as apples, boric acid and almonds later this month following Washington’s decision to withdraw the import preference scheme for the country from June 5.

“The final decision on whether retaliatory duties on US goods would be imposed as scheduled on June 16 or further postponed may be taken by the Commerce Ministry after consultations with the Ministry of External Affairs,” a government official told BusinessLine .

With the Trump regime withdrawing the Generalised System of Preferences (GSP) scheme for Indian exporters, many in the Commerce Ministry feel that the long-planned retaliatory duties should be finally imposed, the official said. But the government will also take into consideration the diplomacy angle. “The government has to strike the delicate balance between standing its ground and maintaining its strong diplomatic ties with the US,” the official said.

Interestingly, the MEA, under newly appointed Union Minister S Jaishankar, helped the Commerce Ministry last week in drafting the government’s official reaction to the Trump administration’s decision to withdraw the GSP scheme for the country.

While not being too critical of the US for withdrawing the benefit that allowed over 3,000 items to be exported duty-free from India, the statement stressed that it will keep its focus on what is best for its people.

The retaliatory duties on 29 goods exported from the US to India totalling more than $130 million were announced in June last year in response to imposition of penal tariffs of 25 per cent on steel and 10 per cent on aluminium from the country by the US.

It had since been postponing implementation of these duties hoping for a resolution of the on-going trade concerns between the two countries. The last couple of times it was postponed in the hope that the US will decide against withdrawal of the GSP scheme. As per the last notification issued by the Finance Ministry in May, the retaliatory duties are now to be imposed on June 16 if there is no further postponement.

The US has withdrawn the GSP scheme as it believes that India does not provide a level playing field for American businesses and has not taken enough steps to bridge the trade imbalance existing between the two countries.

The Trump government 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. It is also putting pressure on India to make changes in its intellectual property rights (IPR) regime.

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