Amid rising trade tensions, India is likely to impose long-promised retaliatory tariffs on 29 products imported from the US, The Indian Express has learnt. The Finance Ministry is expected to issue an official notification to this effect before Sunday, according to a government official.
The move comes almost two weeks after the Trump administration announced its decision to withdraw India’s duty-free benefits under the US select trade programme and may hit imports of products like almonds, apples, pears, chickpeas and walnuts.
Commerce Minister Piyush Goyal last week indicated that India may not pursue a resolution to the withdrawal of trade benefits under the programme, known as the Generalised System of Preferences (GSP). “We also believe that in our development cycle, certain countries were giving us support, which was an added benefit to our efforts to move out of our problems faster. But, (if) some countries have chosen a different path, we accept it gracefully and I think we’ll reorient ourselves to become competitive even without that,” Goyal had said.
The retaliatory tariffs learnt to be notified soon may see import duties of some of these products, like walnuts, go up as much as 120 per cent. While trade between India and the US stood at about $142.1 billion in 2018, the US is one of India’s largest trading partners, exporting $33.1 billion worth of goods to India in 2018. However, India still had a goods trade surplus of $21.3 billion. In 2018, India imported US almonds worth $543 million which were more than half of US almond exports during the year. India is also the second largest buyer of US apples with imports of $156 million in 2018.
According to the June 2018 notifications, the government has proposed import duties of products like chickpeas to be hiked up to 60 per cent from 30 per cent earlier, while fruits like apples will have an import duty of 50 per cent. Import duties on shelled almonds will be raised to Rs 120 per kg from Rs 100 per kg earlier, while duties on products like boric acid and diagnostic reagents have been set at 7.5 per cent and 10 per cent. India had first notified the retaliatory tariffs on over $200 million worth of goods in June 2018 after the US imposed tariffs on steel and aluminium products. However, the government deferred the move several times over the course of the last year. The deadline that India had last deferred its decision to was June 16.
Meanwhile, New Delhi and Washington were engaged in negotiations over the US Trade Representative’s review of India’s benefits under GSP, which allows some countries duty-free exports of thousands of items to the US. The USTR announced its decision to withdraw India’s beneficiary status in March this year, but initially held off on notifying the withdrawal in May while the Lok Sabha elections were on.
However, soon after the re-elected government was sworn in, US President Donald Trump announced that he was terminating India’s benefits under the GSP scheme, a move that the Commerce Ministry called “unfortunate”. India was the largest beneficiary under the GSP scheme.
“India, like the US and other nations, 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,” the ministry had stated earlier. “Initially, India acted cautiously, deciding not to impose tariffs and hoping to find a solution through mutual consultations. This stance was possibly misread by the US as a sign that India was seeking a compromise,” said Biswajit Dhar, professor, Centre for Economic Studies and Planning, Jawaharlal Nehru University.
“India’s move to retaliate puts the record straight. The government has clearly signalled that it can adequately respond when there are such affronts on its trading rights”, he told The Indian Express. US officials earlier this week reportedly said they were open to dialogue to resolve differences, but demanded India drop its trade barriers. Trump has in the past called India a “tariff king”.