Washington, Jun 2: The second term of the Narendra Modi government seems to have got off to a rocky start on the economic front.
After India lost the tag of world’s fastest growing economy following dismal growth in the quarter ending March, Saturday brought in more troubling news, as US President Donald Trump terminated India’s designation as a beneficiary developing nation from June 5, ending the country’s $5.6 billion trade concessions under the key Generalized System of Preference (GSP) programme.
The GSP is the largest and oldest US trade preference programme and is designed to promote economic development by allowing duty-free entry for thousands of products from designated beneficiary countries.
“I have determined that India has not assured the US that it will provide equitable and reasonable access to its markets. Accordingly, it is appropriate to terminate India’s designation as a beneficiary developing country effective June 5, 2019,” Trump said in a proclamation on Friday ignoring the plea made by several top American lawmakers.
Decision ‘unfortunate’
In reaction, the Modi government termed the US administration’s decision as “unfortunate”.
At the same time, India made it clear that it would continue to build strong economic ties with the US keeping in view its development imperatives and the aspiration of Indians for better standards of living.
In a statement, the Ministry of Commerce and Industry said the Generalised System of Preferences (GSP) were unilateral, non-reciprocal and non-discriminatory benefits extended by some developed countries to developing countries.
It noted that India, as part of its bilateral trade discussions, had offered resolution on significant US requests in an effort to find a mutually acceptable way forward.
“It is unfortunate that this did not find acceptance by the US,” the statement said adding that India shall always uphold its national interest in these matters.
“We have significant development imperatives and concerns and our people also aspire for better standards of living. This will remain the guiding factor in the Government’s approach,” the statement said.
The US had been allowing preferential duty-free imports of up to $5.6 billion a year from India, making New Delhi the biggest beneficiary of the GSP programme.
Under the GSP programme, nearly 2,000 products including auto components and textile materials can enter the US duty-free if the beneficiary developing countries met the eligibility criteria established by the US Congress.
On March 4, Trump had announced that the US intended to terminate concessions extended to India under the GSP programme.
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