India will impose retaliatory tariffs on 28 US products from Sunday after Washington withdrew certain trade privileges this month in a move that is expected to aggravate trade tensions between the two countries.
The notification issued by the Finance Ministry in Delhi late Saturday night said the increased customs duties will come in effect from Sunday. The move will hurt US exporters of items such as nuts, lentils and apples, making those items costlier on the Indian market.
Amending a previous order, the Central Board of Indirect Taxes and Customs (CBIC) said the notification will ‘implement the imposition of retaliatory duties on 28 specified goods originating in or exported from USA’ while preserving the existing rate for these goods for all other countries.
India had first announced the higher tariffs in June 2018, in retaliation to a US decision of significantly hiking customs duties on Indian products like steel and aluminium, but repeatedly postponed the deadline. The current deadline expired on Sunday.
India and the US enjoy close bilateral ties, but Washington has long accused India of being a ‘high-tariff country’ that limits access to its huge market.
On 1 June, US ended its preferential trade treatment for India by terminating its designation as a beneficiary developing country.
New Delhi had termed the US withdrawal from the Generalized System of Preference (GSP) as ‘unfortunate’ and said India would always uphold its national interest in such matters.
The GSP programme, introduced in 1976, is aimed at promoting economic growth in developing countries and allows designated countries to export some 2,000 industrial and textile products to the US duty-free. India was the biggest beneficiary.
India's Commerce Minister Piyush Goyal, however, minimized the effects of the change after a Board of Trade meeting on June 7: ‘It has had an impact on some sectors, some places ... 1 per cent, 2 per cent ... India is no more an underdeveloped or least developed country that we will look at that kind of support.’ India's decision on higher levies comes ahead of a visit by US Secretary of State Mike Pompeo scheduled in the last week of June.
Pompeo, in recent remarks at a meeting of the US-India Business Council in Washington, had said ‘some tough topics’ were likely to be on the table during his New Delhi visit, including the GSP programme.
‘We remain open to dialogue, and hope that our friends in India will drop their trade barriers and trust in the competitiveness of their own companies,’ Pompeo had said.
According to the domestic media, India will get about 217 million dollars additional revenue from such imports after Saturday's notification.
India's exports to the US in 2017-18 were pegged at around 47.9 billion dollars while imports were at 26.7 billion dollars .The trade balance is in favour of India.
The United States' trade issues with China, India as well as other countries are expected to come up during the G20 meeting scheduled in Osaka, Japan, at the end of this month.
US President Donald Trump and Indian Prime Minister Narendra Modi are scheduled to attend the summit.
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