India might impose retaliatory tariffs after the US withdrawal of GSP benefits. Almost 30 items imported from the US, including walnuts, lentils, boric acid and diagnostic reagents, will face higher duties, cutting benefits to US exporters.

Indian exporters feel the withdrawal of GSP will not make much difference to them. The withdrawal is only going to inject an estimated additional burden of $190 million, which is miniscule compared to India’s overall exports to the US. In fact even the US was benefiting from the GSP regime, since the intermediary inputs provided by India helped keep its industry competitive.

India was the largest beneficiary of the GSP program in 2017. India’s top exports to the US under GSP in 2017 included motor vehicle parts, ferro alloys, precious metal jewelry, building stone, insulated cables, leather products, garments and wires. India’s trade surplus for merchandise goods with the US is around $19 billion. Also, most of the exports are of intermediate goods not produced in the US. From 2015 to 2017, imports of capital goods (machinery, equipment, aircraft, semiconductors, engines, tractors etc) and industrial equipment (lumber, chemicals, aluminium and copper, iron and steel, cotton and wool, plastics, fuels etc) together accounted for 55 per cent of the total imports of the US.