USA to discuss trade and E-Commerce with India

Prelims level : Economy Mains level : Effect of policies and politics of developed and developing countries on India’s interests, Indian diaspora,
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In News:

  • S. Ambassador to India will lead a delegation of officials to hold talks with Union Commerce Minister of India to resolve several sore trade points, including the concerns of American CEOs regarding doing business in India, bilateral trade imbalance, Generalised System of Preferences (GSP) issue.


  • India’s new data localisation rules that force foreign companies to store Indians’ data within the country, and rules amending FDI rules in e-commerce that had hurt American giants like Amazon and Walmart. These are likely to be high on the agenda Indo-U.S. CEO Forum.
  • Trade tensions between the two countries rose last March when U.S. President notified the imposition of higher import tariffs on steel and aluminium, which affected several countries, including India. In retaliation, India announced counter-tariffs on 29 American goods, worth about $235 million, but has delayed implementing them in the hope of resolving the matter.
  • India’s exports to the U.S. in 2017-18 stood at $47.9 billion, while imports were $26.7 billion. USA had earlier raised the issue of unequal trade and tariffs between the two countries.

What is GSP (Generalized System of Preferences)?

  • The Generalized System of Preferences (GSP), instituted in 1971 under the aegis of UNCTAD, has contributed over the years to creating an enabling trading environment for developing countries.
  • The following 13 countries grant GSP preferences: Australia, Belarus, Canada, the European Union, Iceland, Japan, Kazakhstan, New Zealand, Norway, the Russian Federation, Switzerland, Turkey and the United States of America.

What is the impact of GSP withdrawal on India?

  • The GSP removal will leave a reasonable impact on India as the country enjoyed preferential tariff on exports worth of nearly $ 5. 6 billion under the GSP route out of the total exports of $48 bn in 2017-18. In total India exports nearly 1,937 products to the US under GSP. According to the Washington Post, 90 percent of Indian/Brazilian exports to America face normal US tariffs and hence will remain unaffected from the exit of the GSP program.
  • Removal of GSP indicate a tough trade position by the US; especially for countries like India who benefited much from the scheme. The US was insisting India to reduce its trade surplus. India is the 11th largest trade surplus country for the US and India enjoyed an annual trade surplus of $ 21 bn in 2017-18.
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