India’s trade ministry proposes delaying retaliatory tariffs on U.S. goods

March 29, 2019

NEW DELHI (Reuters) – India’s trade ministry has proposed that the government delays by a month the imposition of retaliatory tariffs on some U.S. goods that were due to go into effect from April 1, a trade ministry spokeswoman told Reuters on Friday.

Trade friction between India and the United States escalated after President Donald Trump announced plans earlier this month to end preferential trade treatment for India that allows duty-free entry for up to $5.6 billion worth of its exports to the United States.

Indian officials believe India could lose its preferential treatment in early May. The Indian government has asked the U.S. administration to review its decision, two government officials with close knowledge of the matter said.

In June last year, India had announced it would increase import duties varying from 20 percent to 120 percent on a slew of U.S. farm, steel and iron products, angered by Washington’s refusal to exempt it from new steel and aluminum tariffs.

But since then, New Delhi has repeatedly delayed the implementation of those enhanced duties.

The trade ministry spokeswoman said the government planned to send a delegation to Washington to address bilateral trade issues, and that the ministry was seeking to hold off imposing retaliatory tariffs until May.

“The Ministry of Commerce has requested the Department of Revenue to extend the deadline for imposition of tariffs on U.S. goods by another 30 days,” the spokeswoman said.

The revenue department falls within the finance ministry, and the two ministries need to consult over any decision to delay the tariffs.

India is the world’s largest beneficiary of the Generalized System of Preferences (GSP), which dates from the 1970s, and ending its participation would be the strongest punitive action the United States has taken against the country since Trump took office.

The timing of the U.S. decision to revoke the trade privileges is awkward for India as Prime Minister Narendra Modi’s government is heading into a general election. Voting will take place between April 11 and May 19, and the results will be announced on May 23.

(Reporting by Neha Dasgupta; Editing by Sanjeev Miglani & Simon Cameron-Moore)

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