From June 5, the preferential trade terms for a category of Indian exports to the United States will come to an end. President Donald Trump's administration made the announcement last week, venting its frustration over India's stance as regards market access to some categories of US exports. In the larger scheme of things the changed American stance, which overturns decades of a pattern of trading ties, does not make much sense, especially since the values are relatively small in monetary terms.
Under the Generalised System of Preferences (GSP), about 11 per cent of Indian exports to the US, that totalled around $54 billion in 2018, enter the US market without duty. Thus, around $6 billion worth of goods spanning 119 items will now become dutiable.
India has considerably reduced the price of medical items such as stents for the heart, and knee implants. American pharmaceutical companies have long been upset over this as they now become uncompetitive.
New Delhi has also raised tariffs on ICT (information and communication technologies) in order to promote its own nascent industry. India further seeks certification that US dairy products exported to it are not based on bovines fed on animal organs. Negotiations with America on these matters, stretched over a long period, have not produced results.
Newly-imposed US tariffs on some Indian exports should spur our companies to become efficient and cut costs. That is the ideal situation instead of haggling interminably with the Trump administration on low-value items. India and the US have consolidated their relationship in the past two decades, especially in the strategic field. The latest trade blip does not spell a setback.
