The US has suspended GSP benefits for India. The Generalized System of Preference (GSP) is the largest and oldest US trade preference program and is designed to promote economic development by allowing duty-free entry for thousands of products from designated beneficiary countries. Under the GSP program, nearly 2000 products including auto components and textile materials can enter the US duty-free if the beneficiary developing countries meet the eligibility criteria. India was the largest beneficiary of the program in 2017.

Now the US wants to ensure that American companies have a level playing field. The country wants India to address policies including data localisation and e-commerce measures that stifle international investment from top tier companies. The US does not want to see market access barriers to American firms in India when Indian companies currently enjoy largely unfettered access to US markets. Depending on progress India can have GSP benefits restored.

There has been a significant growth in the bilateral trade relationship as well as a narrowing of the trade deficit. The bilateral trade is now at about $142 billion. Last year, the US exports increased 28 per cent. Trade deficit for goods and services stands at about $24 billion, which is about a 11.9 per cent reduction.