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India’s Reply to Donald Trump’s Tariffs

A day after the Donald Trump led USA decided to terminate the designation of India as a beneficiary developing country under the “Generalised System of Preferences” or GSP Programme, thereby slapping a tariff on $ 5.6 billion worth of exports from India, New Delhi is likely to impose retaliatory tariffs on $ 10.6 billion worth of goods imported from the US.

India has deferred applying higher import duty on US goods an unprecedented six times during the last year to keep trade negotiations with the US from collapsing; however, now, New Delhi seems to be putting its foot down and levying tariffs on almost double the amount the US was planning to.

The GSP Programme allows duty free entry of around 1,900 products from India into the US, benefiting Indian exporters to the tune of $ 5.6 billion, but, according to the Commerce Ministry, the revoking of this designation will not have much impact on India as duty benefits on this $ 5.6 billion is worth only $ 190 million. In fact, if India levies tariffs of its own, it could end up hurting US exporters much more than their Indian counterparts.

There are 60 days remaining before which the higher tariffs from the US kick in, and an official from the Ministry of External Affairs has said that India would continue to work with the US to find a solution in the meantime.

US exports to India have gone up 30% in the past year and this has come in a globally depressed market. Oil and Gas imports have also gone up, and hence, any move by the US to disrupt the status quo would in effect be a self damaging move by the US.

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