India is considering taking the US to the World Trade Organization (WTO), following Washington’s decision to withdraw from the bi-lateral Generalized System of Preferences (GSP) agreement between the two countries.

GSP is a US trade program designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 4800 products worth US$5.6 billion from 129 designated beneficiary countries and territories.  

Under GSP, the main exported items from India are nucleic acids, stainless steels, steering wheel parts, pesticides and automotive parts. Also included under GSP are some agricultural products, seafood and handicrafts.

“The GSP duty concession benefits were worth only some US$190 million,” said Indian commerce secretary, Anup Wadhawan. Following GSP suspension, India prepared a list of US$10.6 billion worth of US products for retaliatory higher tariffs.

In response to the US action, India has announced that it will implement duties on 29 US products, including edible fruits, nuts, commodities and other industrial products, on 1 April this year. New Delhi has already protested about new US customs duties on Indian steel and aluminium products.

However, the Federation of Indian Export Organisations (FIEO) has suggested that the government considers providing additional benefits to the affected exporters. An example would be allowing for the reduction of the price of landed goods to offset increased US tariffs.

The US Trump administration started reviewing India’s preferential trade privileges in April 2018, complaining that New Delhi had not sufficiently opened up its market to justify duty-free access to the US market.

Washington claims that New Delhi needs to reduce higher import duty and restrictive domestic market policy that are impacting US retailers. Items affected by Indian restrictions include electronic and electrical products, transport and communication items, medicines and smartphones, among others.

The importance of trade to both the US and India is reflected in the value of goods traded between the two countries. In 2018, the US imported US$56.5 billion worth of products from India, while exports totalled some US$33.1 billion to India, according to the International Trade Centre.

The US is India’s largest export market and the second largest supplier of imported goods after China.