While the nation was eagerly awaiting the Lok Sabha poll results, the US, our biggest trade partner, withdrew the tax benefits that had so far been available to India. As the withdrawal of the Generalised System of Preference was issued by Donal Ross, US Commerce secretary, Indian diplomats scuttled to control the damage.
The ministry of external affairs and commerce ministry officials had cobbled up an agreement during Ross's visit to India, in which the US had promised extension of the benefits to Indian exporters till the time a new government is formed in New Delhi.
The newly-elected Union government has called the development 'unfortunate'. New Delhi termed the GSP benefits as unilateral, non-reciprocal and non-discriminatory benefits extended by some developed countries to developing countries. "India as part of our bilateral trade discussions, had offered resolution on significant US requests in an effort to find a mutually acceptable way forward. It is unfortunate that this did not find acceptance by the US," read a statement from the commerce ministry, now headed by Piysh Goyal as minister.
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No amount of persistence with the US authorities yielded any result for India—a long trade partner with whom the US carries a formidable trade deficit. According to the US Trade Representative's Office, the US goods and services trade deficit with India was $27.3 billion in 2017.
The Trump administration had repeatedly called to reduce US trade deficits and protested against India's high tariffs against US-made articles like medical equipment and vehicles. High tariff on food products and medicines was also a cause of Trump's disgruntlement with India.
New Delhi, too, indicated that it would take the path that favours nationalism over multilateral interests. "India, like the US and other nations shall always uphold its national interest in these matters," the government statement read. It also said that India's intentions are to seek development imperatives and to meet people's aspirations for better standards of living. "This will remain the guiding factor in the government's approach."
The commerce ministry said that it would continue to work with the US and said that these are 'ongoing issues' in the area of economic ties that gets resolved from time-to-time. "We view this issue as part of this regular process and will continue to build on our strong ties with the US," the government statement added, in a bid to not upset its largest trade partner.
Commerce ministry officials said that they would continue to engage and pursue this matter with the US. "We will continue to raise these issues with the US," said Anup Wadhawan, commerce secretary, without wanting to elaborate on anything beyond the official statement.
But till something is worked out to convince the US to reverse its stand, exporters and traders will have to accept it and hope to survive by becoming more competitive.
