No tit-for-tat, but higher tariff on US goods finally

Top imports from US that are expected to see a tariff hike Amount of imports in 2017-18 ($ mn)

India is not keen to engage the US in a tit-for-tat despite being cut off from duty-free access to its markets, but in April, the government will finally impose higher duties on 29 key imports from the country. This roll-out has been deferred six times.

On Monday night the US cut off India from the benefits of the Generalized System of Preference (GSP) scheme. New Delhi, on Tuesday, played down its impact, and said the withdrawal process would take at least 60 days.

“A new set of tariffs will only complicate matters. If we survived the first year of a global trade war between two of our closest trade partners (US and China), we can survive another, despite a new crisis,” said a senior commerce department official, who did not want to be named. Media reports have suggested that the government is chalking up a set of imports from the US on which commensurate higher tariffs can be placed. He added the Trump administration had cut off other countries from the GSP scheme as well. “The Indian tariffs were announced last year. Industry in both nations have had time to deal with possible changes,” said the official.

India is the largest beneficiary under the GSP. Another official said the tariffs that will go live in April should not be seen as retaliation for the GSP withdrawal. “We decided on this a long time back,” he added.

The tariffs were supposed to be originally rolled out on June 28 last year. Despite being notified by the Central Board of Indirect Taxes and Customs, these have been postponed. In the meanwhile, four delegationlevel talks with Washington DC have been unable to solve the issue. The higher tariffs were a response to the Trump administration slapping duties on steel and aluminium imports from India. New Delhi had announced higher duties — up to 50 per cent higher — on agricultural imports such as apples, almonds, and walnuts as well as some industrial products.

The new taxes are proposed torakeinanestimated$240million extra. These are spread across sectors from which imports stood at $1.5 billion in 2017-18.

New Delhi claimed the amount was equal to the estimated loss faced by India after the Trump administration imposed a 25 per cent extra levy on steel and 10 per cent on aluminium products. Since then, other nations have been given an exemption by the US from the steel and aluminium duties.