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India U.S. mull over unfinished work

Topics Covered: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

India, U.S. mull over unfinished work:


As Trump tenure winds down, deals in trade, sanctions, nuclear energy hang fire between India and the US. The unfinished businesses include:

  1. No blanket waiver of the Countering America’s Adversaries Through Sanctions Act (CAATSA) sanctions for buying Russian/Chinese arms.
  2. Failure to reverse the decision to revoke India’s Generalised System of Preferences (GSP).
  3. Commercial contract to be finalised for the decade-old MoU between U.S.-based Westinghouse Electric Company and Nuclear Power Corporation of India Ltd. (NPCIL) to build six reactors in Andhra Pradesh.

Achievements so far:

  1. The growing defence partnership, enhanced military exchanges bolstered by the signing of four foundational agreements: GSOMIA, LEMOA, COMCASA and BECA.
  2. U.S. grant of the STA-1 Strategic Trade Authorisation to India, capped by intelligence sharing and quick procurements during the ongoing standoff between Indian and Chinese troops at the Line of Actual Control (LAC).
  3. Crystallisation of the “Quad” arrangement.

What is the Generalised System of Preferences (GSP)?

  • It is a U.S. trade program designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 4,800 products from 129 designated beneficiary countries and territories.
  • GSP was instituted on January 1, 1976, by the Trade Act of 1974.
  • GSP has been given on non-reciprocal basis. Yet the US has linked it with market access and tariff reduction which is against the basic tenets of GSP.

When was it withdrawn?

The privilege was withdrawn by outgoing President Donald Trump’s administration in Washington DC in June 2019 and India has been prodding the United States to restore it.

Benefits of GSP:

  1. Indian exporters benefit indirectly – through the benefit that accrues to the importer by way of reduced tariff or duty free entry of eligible Indian products.
  2. Reduction or removal of import duty on an Indian product makes it more competitive to the importer – other things (e.g. quality) being equal.
  3. This tariff preference helps new exporters to penetrate a market and established exporters to increase their market share and to improve upon the profit margins, in the donor country.


Prelims Link:

  1. About GSP.
  2. Countries covered under this program.
  3. When was India removed?
  4. Benefits under the program.
  5. What is quad?
  6. Four foundational agreements.

Mains Link:

What are the benefits of the Generalized System of Preferences (GSP) trade privilege for India? Discuss.

Sources: the Hindu.