The US has agreed to restore the benefits under the Generalized System of Preferences (GSP) scheme to India as part of the mini trade deal that the two countries were aiming at, but it's unlikely that the deal will go through before the US presidential elections in November.
"The US has agreed to restore GSP benefits and we told them that a limited trade package would be a good idea. We had a talk with US officials earlier in September. But, one must understand they are busy with their elections, whatever has to happen will happen post that," a senior official told Moneycontrol.
India and the US have been trying for a free trade agreement (FTA), for which both the countries have been working on an initial trade deal for almost two years now. A number of issues, like medical devices, agriculture, Harley Davidson motorbikes, e-commerce, among others, had made it difficult to make any headway on the limited trade deal.
As a part of the mini trade deal, India asked for a complete restoration of benefits under the GSP scheme and market access for some agricultural products, the official said.
In 2018, the US withdrew the GSP benefits, a kind of a quota for each developing country at zero or low duty, for more than ten countries including India.
According to the Office of the United States Trade Representative, as part of GSP, India exported goods worth $6.3 billion to the US, accounting for around 12.1 percent of India’s total export to the US in 2018.
India’s exports to the US in the first quarter of FY21 were $8.13 billion while imports were $5.24 billion.
The US has been wanting lower duties for its apples, pecan nuts, walnuts, almonds and soya bean. India is keen to get market access for its mangoes, pomegranates and grapes.
In July 2019, India slapped additional customs duties on as many as 28 products, including almonds, walnuts, fresh apples, and pulses. Higher tariffs slapped on US imports were preceded by the US imposing additional tariffs on steel and aluminium. In 2018, the US slapped 25 percent additional tariff on steel and 10 percent on aluminium imports from countries including India.