Wednesday, 06 March 2019 11:17

India may impose retaliatory tariffs on US goods from April 1

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The decision could derail the substantive package that India and US were working on to resolve trade issues.

 

New Delhi: India is likely to impose higher duties on 29 goods imported from the US from April 1, adopting a firmer stance in relations with one of its biggest trading partners, which withdrew benefits under the Generalised System of Preferences (GSP). The decision could derail the substantive package that India and the US were working on to resolve trade issues. “That package is now off the shelf since the GSP review was triggered… but there is still a period of 60 days,” people from the external affairs ministry said. Higher duties have been proposed on US walnuts, chickpeas, lentils, boric acid and diagnostic reagents, among other goods, imposing an additional burden of $290 million on them. The increased levies, proposed in June 2018 after the US announced higher tariffs on certain steel and aluminium products from which India had sought exemption, have been deferred six times in view of the bilateral trade dialogue. “We will wait for the April 1 deadline and then impose the higher tariffs,” said an official aware of the details. The US had announced heavy tariffs on imported steel and aluminium items on March 9 last year, although they haven’t been imposed yet. India’s counter-levy was to come into force from August 4 but has been deferred every month since then. 

 

Now, with the US terminating preferential treatment to Indian exports under GSP, India is likely to let the tariffs kick in even though it has maintained that retaliatory tariffs are a separate issue and no knee-jerk reactions are warranted. With the new tariffs, import duty on walnuts would quadruple to 120%, while that on chickpeas, Bengal gram (chana) and masur dal would more than double to 70% from 30%. The levy on lentils would be increased to 40% from 30%. India had repeatedly extended the deadline for imposing higher duties in the hope of resolving ongoing trade issues with the US ranging from GSP, agriculture and dairy to medical devices, telecom and e-commerce. “When the US has decided to withdraw the export benefits and the impact on India is marginal, then we should take it forward and impose higher tariffs on their products,” said an expert on trade issues.Experts have said the products that the commerce department has chosen to impose higher duties are those that are key to the US industry. While diagnostic reagents for blood tests are tied to the machines that use them and are dominated by US and German companies, boric acid is a key chemical used as an antiseptic, insecticide or flame retardant in virtually every chemical industry. However, the plan to reduce the US trade deficit with India is on track and India will continue to buy oil and gas from it. India imported $5.45 billion of mineral fuels, mineral oils, bituminous substances and mineral waxes from the US in the April-December period of 2018-19 compared with $4 billion of these purchases in 2017-18. 

 

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