US could restore GSP for Indian exports, mini trade deal between two countries

The US and India are coming closer to each other to prevent China’s expansion into world trade. In view of the growing closeness between the two countries, it is expected that the US can again restore the generalized system of preference (GSP) for India. In return, India can reduce or abolish import duty on 28 types of goods coming from the US.

The US and India can soon deal with mini trade to implement this type of system. The US can now circumvent the issue of digital tax being levied by India to carry out the mini trade deal without interruption. The two countries believe that the Free Trade Agreement (FTA) is a long process, so the mini trade deal is more effective now.

According to commerce and Industry ministry sources, India is of great benefit due to the re-restoration of GSP. In June, 2019, the US excluded India from the list of GSP. At that time, India was exporting about 2000 products to the US on which no fee was charged in the US. This reduced the price of these products in the US and the demand remained in the US market. These included items ranging from auto components to textiles.

India exported goods worth $5.7 billion to the US under the GSP. India retaliated by the US for making India out of the GSP and hiked the duty of 28 products coming from the US.

According to commerce and Industry ministry sources, the US is also keen on India for a mini trade deal between India and the US. According to ministry sources, several US senators and Congress members have recommended a mini trade deal with India to the US Trade Representative (USTR) on last Thursday (August 27, 2020).

The letter sent to the USTR says that trade between India and the US registered a growth of 560% between the years 2000 to 2017. In 2000, trade between the two countries grew by $19.1 billion to $126.2 billion in 2017. US senator and Congress members say there are complications between the two countries on the digital tax (Google tax) being taken by India, but now this disagreement can be overcome in a later trade agreement.