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India may be spared GSP withdrawal pain till elections are over, hints US

Amiti Sen New Delhi | Updated on May 07, 2019 Published on May 07, 2019

File photo of US Commerce Secretary Wilbur Ross   -  REUTERS

US Commerce Secretary Ross also conveys displeasure over ‘unstable’ e-comm policy

The US has indicated that it will not withdraw the Generalised System of Preferences (GSP) scheme offering duty free access to over 3,000 Indian products till the ongoing general elections in India are over and a new government is in place.

US Commerce Secretary Wilbur Ross, in his meeting with Commerce Minister Suresh Prabhu, also expressed concerns over the “unstable’’ e-commerce policy of the government, which was adversely affecting US companies that have invested in India, an official close to the development told BusinessLine.

“While the US did not include the GSP issue officially in its agenda for the meetings with the Finance Minister and the Commerce Minister, the team indicated clearly that India need not worry about the scheme getting withdrawn till the general elections are over and a new government is sworn in. This is possibly to give the new government a chance to sort out US’ concerns in the area of trade,” the official said.

The US Trade Representative’s office had announced in March that the US planned to terminate India’s and Turkey’s designations as ‘beneficiary developing countries’ because they no longer complied with the statutory eligibility criteria. The withdrawal was to be implemented through a Presidential proclamation in May.

On the changes in the e-commerce rules made by India in December last year, which barred e-retailers from holding a stake in seller-entities that sell on their marketplace and sourcing over 25 per cent of their inventory from a single vendor, Ross said India should not be changing its rules so frequently.

“The US pointed out that its companies were hit badly because of changing rules as they had to completely overhaul their operational systems,” the official said. The new rules are being vehemently opposed by US-based Amazon and Flipkart (which has investments from Walmart) which dominate the Indian e-commerce space. “India tried to convince the US that the e-commerce policy was not final and that comments from different stakeholders, including the US, were being examined,” the official said.

Price caps on pharma

The US also raised the issue of price caps on medical equipment and pharmaceuticals, which is one of the reasons why the country is considering withdrawal of the GSP. While India agreed to implement the trade margin rationalisation (TMR) model by calculating the margin based on landed cost,, the US is insistent that it should be based on the first point of sale (price to stockist).

“India assured the US that it was working in the direction of allowing TMR based on first point of sale,” the official said.

Published on May 07, 2019
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