LAHORE, 18TH FEB 2020: While India is preparing itself to welcome Trump, America has removed India from the list of developing countries which is a big blow to their economy.
The US has taken a bold and clear move to keep India under pressure during the visit of President Trump by excluding India from special preferences for a list of self-declared developing countries. This move by the US to take off India from the list of developing nations surely hampers chances of India reclaiming export benefits under Generalized system of Preferences (GSP). In India, concerns and voices are being raised against this move of US and the most vocal in it are of the former BJP ally Shiv Sena.
Data from the United States Trade Representative’s (USTR) office shows that India is the largest beneficiary nation under the GSP, with total benefits from tariff exemptions amounting to $260 million in 2018.
According to the World Bank Data, the US removed India (and some other nations) from the list on account of it being a G-20 member. It held that India be regarded as a developed nation, ignoring the fact that India’s per capita Gross National Income (GNI) is way below the threshold of $12,375. India, with a per capita income of just $2,000 is miles away from the status of a developed country.
Under Modi regime despite being one of the poorest, India has presented a high profile image of itself in the international arena. With just $2,016 per capita income India is ranked 146th country in the world.
Serious negative effects on Indian commerce are faced due to Presidential executive orders of President Donald Trump on November 2018 ending duty-free status of 50 Items. Indian Commerce and Industry Minister Piyush Goyal made an effort to play down the tense situation by posing that India can be competitive without getting any GSP benefits from US. Fact is that negotiations of continuity of GSP has been continued between India and the US. The exporters feel that this exclusion would make Indian products more uncompetitive.
Indian government is apprehensive that losing preferential status would not only be a loss of $260 Million in GSP but heavy unemployment and stagflation in the country and the economic front would face immense pressure.