Donald Trump terminates India from GSP program

Donald Trump terminates India from GSP program.

The Donald Trump regime has decided to remove India from GSP citing due to its inability to provide equitable access to its markets. Turkey is supposed to be removed too. The tariffs are set to be imposed within 60 days. This came as a surprise for both the countries. The decision is going to impact the Indian economy. As its trade with the United States under the GSP system is $5.6 billion. India had the highest exports among all counties listed in the GSP. Indian exports included goods like handicraft products, farm exports and marine exports. Small businessmen in India and customers in the US are expected to suffer after the removal of the system.


Generalized System Preference is a taxation system for poor or developing nations to sell their goods at a lower tax rate than others. It gives a boost to overall trade in the countries as the importing country gets goods at lower costs. The exporting nation benefits as it is allowed to sell its product at a competitive price in the market of the importing country.

The system was formulated by the United Nations Conference on Trade and Development (UNCTAD) in 1971. It is with the objective of helping developing nations, particularly, ‘Least Developed Countries’ (LDC) to their promote trade and business. UNCTAD has helped improve the business scenarios of a lot of countries with the introduction of schemes such as this. The GSP scheme pulls countries out of the World Trade Organizations (WTO) ‘Most Favored Nation’ principle. This is where nations are to treat each other as equal traders.

Many developed nations have taken up the mantle of providing GSP schemes to poorer countries. Australia, New Zealand, Canada, Switzerland and many similar nations have been providing other countries with GSP scheme since years. Eligible countries can apply for entering GSP.


India’s Reaction

India is expected to face hardship after its removal. they could look to impose retaliatory tariffs on US goods, but Indian government wants to avoid the chance of this spiraling into a full-scale trade war. Hence has ruled out any tariffs that could have been imposed on the $10.6 billion imports from the US.

The US is India’s largest trading partner. Bilateral trade between the two countries stood at a humongous $74.5 billion in 2017-18 and has steadily increased over the years. Recently, the US government has observed that this trade scheme has worked in favor of India. To balance the scales, President Donald Trump looks to impose heavier tariffs on Indian imports. This would seemingly help domestic businesses in the US creating more jobs. Job creation was a major election promise of President trump. Therefore this decision is an important one for President Trump.


Impact on India

Although, some experts believe that this move will not have much of an impact on the India economy or its exports. According to The Federation of Indian Export Organization, Indian exports are to remain unaffected because the impact is going to be negligible. It is going to be restricted to a very narrow range of products like processed food, leather, plastic etc.

The move does seem sensible when we observe the recent developments that have taken place with respect to the Indian economy. India has surpassed Britain in terms of GDP. Further it has been growing at a phenomenal rate, roaming between 6-7.5%. It hardly seems like a cause of concern for India considering the insignificant number of products that will be affected because of this. As of now, it appears as if more damage would be done to US citizens as many essential medical devices would become expensive. It would hurt the already ailing healthcare system of the United States


ONGC receives bid from Schlumberger for upgradation of oilfields


Related Posts


[…] Donald Trump terminates India from GSP program. […]