The US is reviewing the generalized system of preferences (GSP) through which Indian exporters get preferential market access to the US. This means Indian exports could be hit. The US has been accusing India of unfair trade practices and has challenged most of its export subsidies at the World Trade Organization. Moreover, it has not granted India an exemption on an unilateral hike in steel and aluminium tariffs, unlike its other strategic allies.
The GSP program allows duty-free entry of 3,500 products from India, which benefits exporters of textiles, engineering, gems and jewelry and chemical products. Of the total US imports under GSP in 2017 India was the biggest beneficiary followed by Thailand and Brazil.
For India, GSP eligibility review is based on concerns by the US dairy industry and the medical device industry alleging Indian trade barriers affecting US exports in those sectors. India has very high import duties on dairy products to protect its domestic industry. It has also recently put price controls on medical devices like cardiovascular stents, drawing the ire from big US pharma companies.
Though India is worried about the move, it hopes a majority of US industries which get cheaper intermediate products from India due to GSP benefits will support continuation of the program.