US considering withdrawal of zero tariffs for India
new delhi — India could lose a vital US trade concession, under which it enjoys zero tariffs on $5.6 billion of exports to the United States, amid a widening dispute over its trade and investment policies, people with close knowledge of the matter said.
A move to withdraw the Generalised System of Preferences (GSP) from India, the world’s largest beneficiary of a scheme that has been in force since the 1970s, would be the strongest punitive action since President Donald Trump took office in 2017 vowing to reduce the US deficit with large economies.
Trump has repeatedly called out India for its high tariffs.
Indian Prime Minister Narendra Modi has courted foreign investment as part of his ‘Make in India’ campaign to turn India into a manufacturing hub and deliver jobs to the millions of youth entering the workforce.
Trump, for his part, has pushed for US manufacturing to return home as part of his ‘Make America Great Again’ campaign.
The trigger for the latest downturn in trade ties was India’s new rules on e-commerce that restrict the way Amazon.com and Walmart-backed Flipkart do business in a rapidly growing online market set to touch $200 billion by 2027.
The GSP was tied to the trade package and since that deal had slipped further away, the United States was considering withdrawing or scaling back the preferential arrangement, two sources said, speaking on condition of anonymity because of the sensitivity of the matter.
The US Trade Representative was completing a review of India’s status as a GSP beneficiary and an announcement was expected over the next two weeks, the sources said. “[The two sides] were trying to sort out the trade package, but were not able to actually finish the deal. In the meantime these other things, data localisation and e-commerce, have come along,” one of the sources said. “In a sense its like someone has rained on the parade.”
India and the United States have developed close political and security ties. But bilateral trade, which stood at $126 billion in 2017, is widely seen to be performing at nearly a quarter of its potential.
Amazon items back
Meanwhile, Amazon has struck a deal that will allow hundreds of thousands of products forced offline because of new e-commerce rules to return to its Indian site, a source said Friday.
Some 400,000 items disappeared from Amazon.in after stringent regulations banning online marketplaces from selling products from firms in which they have a stake came into force last week.
Two of Amazon’s local venture partners, including a firm called Cloudtail, were forced to remove thousands of items from the US company’s website after the regulations kicked in on February 1.
On Friday, a person familiar with the matter told AFP that Amazon had agreed to sell much of its stake in the company that holds Cloudtail.
“With the new structure Cloudtail becomes completely compliant with the new laws and therefore they can now come back and list as sellers,” the source said. “Hundreds of thousands of products will be back,” they added. —