NEW DELHI: India will pitch for continuing the eligibility of its 3,500-odd goods for low or zero duties in the US when commerce and industry minister Suresh Prabhu visits that country early next month.
The US had announced in April that it would review if India’s exports need any preferential or duty-free access to its market, including mechanical and electrical machinery, organic and inorganic chemicals, plastics and vegetables as part of the Generalized System of Preferences (GSP) scheme.
“GSP review is the main thing because our agriculture fishery industry, jewellery and carpet, among other sectors are the biggest beneficiaries of this grant,” said a commerce department official in the know of the details.
Prabhu will visit the US from June 10 to 14 where he is expected to put forward India’s case during his interaction with think tanks and US Congressmen.
“We will strongly argue that we qualify for this benefit and that it should not be removed,” the official added.
Washington has announced eligibility review of India for the GSP, a sort of quota for each country at zero or low duty, along with that for Indonesia and Kazakhstan.
India is the largest beneficiary of the GSP among developing countries at $5.6 billion due to products that get dutyfree access to the US market. The US has been looking at imports from countries with which it runs a large trade deficit, including India.
Harley Davidson, trade imbalance
Another agenda high up on Delhi’s priority list is the US’ demand for zero duties on Harley Davidson motorbikes.
US President Donald Trump had earlier commented on India’s decision to reduce import duty on Harley Davidson motorcycles from 75% to 50% saying it was not enough. He sought “zero tax” on the import of motorcycles, since the US does not impose any tariff on motorcycles from India and threatened to increase the import tariff on “thousands and thousands” of Indian motorcycles to the US.
However, while India is “unbound” or can increase duties since it is not committed to the World Trade Organization (WTO) to reduce tariffs on such high-end motor bikes, the bound duties on such bikes (under various subheadings) range between 1.4% and 2.4% for the US, which means it can’t raise import duties beyond this rate.
Bound rates are the legally bound commitments on customs duty rates, which act as ceilings on the tariffs that countries can set.