In a letter written to the US Congress on March 4, US President Donald Trump discussed plans to end the trade benefits extended to India under the Generalised System of Preferences (GSP) programme.
India is the largest beneficiary of the GSP programme as it brought the country an annual “actual benefit” of just $190 million.
- Terminating it would render it the strongest punitive action Trump has taken against any South Asian nation.
- Farm, marine, and handicraft products will be among the worst hit.
- Countries that do not enjoy the benefits face US tariffs of 2 per cent, which may be applicable for India too in the next few months, depending on whether Trump’s decision actualises.
- The GSP programme covers 3,700 products; fortunately, India used concessions for only just 1,784 of those.
- As per a Reuters report, government officials privy to the terms and conditions have claimed GSP to be more symbolic in nature, its impact on value terms is not worrisome.
- There are, however, speculations that Trump’s move may mar the image of Prime Minister Narendra Modi just ahead of elections, hinting at weakening bilateral ties.