US may take final decision on GSP issue after formation of new government

NEW DELHI: The US is unlikely to take a decision over preferential tariffs on $5.6 billion of Indian exports until May 23, when India gets a new government. This was indicated at bilateral talks over the past two days, sources said. Benefits under the US’ Generalized System of Preferences (GSP) were scheduled to end this week.

“The US has indicated that no movement should be expected on the GSP front before May 23. They will wait till the elections are over,” said a source in the know of details. The US announced withdrawal of special duty benefits on March 5. By statute, these changes may not take effect until at least 60 days after notifications to the US Congress and the Government of India. GSP removal will be enacted by a Presidential Proclamation.

The official said Washington has also hinted it is a natural ally of India due to its strategic importance and should have a deeper relation than other countries. This assumes significance in the wake of US President Donald Trump slamming China for slow talks on a bilateral trade deal, and threatening to slap tariffs on almost all imported goods starting from Friday.


US Commerce Secretary Wilbur Ross met commerce and industry minister Suresh Prabhu on Monday, wherein the two discussed issues related to ecommerce, data protection and localisation and intellectual property rights.

“India is a vital strategic partner. It plays an increasingly important role in South Asia and in the whole Indo-Pacific region,” Ross said at an event on Tuesday. Ross is also understood to have told India that the two should have regular telephonic interactions at the highest level to resolve trade matters.

ECOMMERCE & MEDICAL DEVICES

“The US has shared its discontent at India’s investment norms for inventory-based ecommerce firms,” said the source cited above.

India prohibits ecommerce companies with foreign direct investment (FDI) from selling products via firms in which they have an equity interest. It also bars them from making deals with sellers to sell exclusively on platforms. The policy change of December 2018 had a direct bearing on Amazon and Walmart (that owns Flipkart).

Washington has also flagged its concerns on India’s draft ecommerce policy on data localisation requirements, restrictions on cross-border data flows, transfer of intellectual property and proprietary source code, and preferential treatment for domestic digital products. As per officials, these are being examined and “suitable changes may be incorporated” in the final version.

As for medical devices’ price caps, India is considering a definitive time frame for applying trade margin at the first point of sale, rather than the landed cost, to address the concerns of US medical devices manufacturers. On intellectual property rights, the US sought stricter enforcement of laws.