Latest news with #GeneralizedSystemofPreferences
Arabian Post
6 days ago
- Business
- Arabian Post
After Trump's 25 Per Cent Tariff On Indian Exports, There Is No Cause For Panic
By Dr. Nilanjan Banik Before the August 1 deadline, the U.S. President Donald Trump decided to impose a 25% tariff on Indian exports. He also talked about an additional penalty on Indian exports, which could go up to100% as a surcharge, targeting countries that continue trading oil with Russia. Trump seems to care less about 'friend' India, as trade with India accounts for a much smaller share compared to U.S. trade with China. Because of U.S. interests, China is likely to get a better trade deal than India, for instance removal of restrictions of U.S. chip-design software exports to China. This is not the first time Trump has taken a hard line on India. During his earlier stint at the President not only did Trump label India as the 'tariff king', but he also removed the country from the Generalized System of Preferences (GSP). Under the GSP, established by the Trade Act of 1974, US policymakers allowed imports of around 3,500 products from designated beneficiary countries—primarily low-income nations—at a preferential duty-free (zero-tariff) rate. The aim was to help these countries increase and diversify their trade with the US. According to the World Bank, a 'low-income' country is one with a per capita income of less than $1,045 per year in 2024. As U.S. remains India's largest export destination, it is only natural to feel the pressure with increasingly restrictive trade measures in place. Around 18% of India's total exports are directed to the US, with a value of $77 billion in 2023, and $78 billion in 2024. However, if previous restrictive trade measures, including the withdrawal of GSP, are any indication, then the impact has been relatively modest. A quick review of the items qualified under the GSP reveals that they primarily fall under categories such as textiles and apparel, watches, footwear, work gloves, automotive components, and leather apparel. Among these key export categories, some items within textiles and apparel and automotive components were included in the GSP list. Additionally, exports of organic chemicals, steel, and certain engineering goods—such as nuclear boilers, machinery, and mechanical appliances—were also impacted by the withdrawal of GSP benefits. However, the value of these items as a proportion of total Indian exports to the US is relatively small. India's exports to the US are mainly comprised of diamonds (19%), packaged medicaments (14%), refined petroleum products (8.9%), automotive components (2.1%), and textiles and apparel (3.7%). The percentages in parentheses represent the share of India's exports to the U.S. as a percentage of India's total exports. The recent signing of the India-UK Free Trade Agreement (FTA) is expected to help offset some of the negative effects of excessive tariffs in the long run. Indian policymakers had anticipated a tariff around 20%, but Trump ultimately imposed a 25% rate. Thanks to the India-UK Free Trade Agreement, India stands to benefit from zero tariffs on 99% of its exports, particularly in sectors like textiles, jewellery, pharmaceuticals, automotive parts, and information technology services – areas that commentators fear could be negatively impacted by higher U.S. tariffs. Indian exports to the U.S. are also likely to be less affected in relative terms, since Trump has unilaterally imposed tariffs on countries whose exports compete with India in the U.S. market. For example, Bangladesh (35%), Thailand (36%), Vietnam (20%), Indonesia (19%), Malaysia (25%), and the Philippines (19%) – some of India's competitors in leather, textiles, and machinery – are equally impacted, with the numbers in parentheses indicating their respective tariff levels. To better withstand external shocks — whether from protectionist tariffs or even war — India should focus on making its manufacturing sector/exports more competitive and focus on its domestic economy. The Indian economy benefits from a strong domestic sector, with domestic consumption, government spending, and private investment together accounting for nearly 80% of the country's GDP. However, the contribution of manufacturing value added to GDP remains stagnant at 17%, indicating no significant improvement in manufacturing competitiveness. Foreign Direct Investment (FDI), a key driver of technology transfer and manufacturing competitiveness, is declining, with gross FDI flows dropping to just 1% and net FDI falling to 0.6% in the first half of the 2023-24 financial year—levels not seen since 2005-06. Rigidities in the business environment, the inverted duty structure (IDS), and India's decision to terminate bilateral treaties are to be blamed for discouraging flow of FDI. A study by CUTS International of 1,464 tariff lines across textiles, electronics, chemicals, and metals reveals how the IDS is hurting competitiveness, with 136 items from textiles, 179 from electronics, 64 from chemicals, and 191 from metals most affected. For example, apparel items priced below $14 (Rs 1,000) are subject to a GST of 5%, while those exceeding $14 are taxed at 12%. For textile manufacturers, there are also significant investments required in value-added services such as marketing, warehouse rentals, logistics, courier services, and other fulfilment costs. However, these additional services are subject to a higher GST rate of 18%, making the products less competitive in the international market. The India budget 2025 has addressed the issue of IDS; for example, the government has increased tariffs on Interactive Flat Panel Displays from 10% to 20%, while reducing tariffs on Open Cells and related components to 5%. This trend needs to continue, and policymakers must implement further reforms to enhance the competitiveness of the manufacturing sector. While tariff negotiations is an ongoing process, India could consider strengthening its position by increasing purchases of U.S. oil and defense equipment. During his last tenure, Trump positioned himself more as a major arms dealer, focusing on selling more weapons and oil. India has contracted for nearly $20 billion worth of US origin defense items since 2008. This trend is likely to continue in a potential Trump 2.0. India, for its part, should focus less on tariffs and more on addressing domestic distortions. (IPA Service) (The author is Professor, Mahindra University).
The Diplomat
08-07-2025
- Business
- The Diplomat
The Path to a US-India Trade Deal Lies Through Economic Security
A broader trade agreement, including cooperation on key supply chains, foreign investment, and advanced technologies makes a deal more likely and can help the U.S. and India more effectively counter China. Negotiations for a U.S.-India trade deal have been progressing at breakneck pace, as officials rush to reach an agreement before President Donald Trump's July 9 tariff deadline. India being near the front of the line is surprising, given that the two countries have consistently imposed high trade barriers and haven't signed a deal despite years of discussions. But Delhi is ready to negotiate because it sees an even bigger geoeconomic play: undercut China's status as a leading manufacturing hub and destination for investment by securing key supply chains and investing in advanced technologies. To seal the deal, Washington and Delhi should put economic security issues at the heart of the agreement. Getting to yes will require overcoming a long history of nos. In 2019, the U.S. removed India from the Generalized System of Preferences (GSP) program, and India imposed retaliatory tariffs on 28 U.S. goods in response to earlier Section 232 tariffs on steel and aluminum. While mutual tech and defense cooperation increased during the Biden administration, and India joined the non-trade pillars of the Indo-Pacific Economic Framework, there was little progress in improving market access apart from the removal of previous tariffs and resolution of WTO disputes. Despite Trump's recent optimism, ongoing negotiations for a first tranche deal are facing several hurdles, largely due to U.S. demands for lower trade barriers for steel and agricultural products. The task of lowering tariffs and non-tariff barriers for agriculture is especially politically costly for the Indian government, given that 46 percent of the workforce is involved in agriculture. While still willing to negotiate, Indian officials have signaled their preference for a good deal that puts national interest first rather than just a deal, which may defer discussions on tariffs for key industries and constituencies to a future round of negotiations. Washington and New Delhi's mutual economic dependence on China presents yet another opportunity for collaboration in national interest. The U.S. and India are reliant on China for a variety of goods, ranging from steel and rare earths to solar cells and pharmaceutical inputs, which are vital for commercial industry as well as national security needs. Recent episodes, including China's export ban on rare earths, have highlighted just how vulnerable their respective economies are to Chinese economic coercion. This dependence is holding back the U.S.-India economic partnership, and while reducing tariffs and other trade barriers is an important step, addressing the dragon in the room can cement this relationship as 'the defining partnership of the 21st century.' To this end, policymakers must consider deepening cooperation in three core pillars of economic security — securing supply chains, building resilience against foreign economic coercion, and building an allied ecosystem for advanced technologies — to enhance the value of a trade deal and address common security concerns. Collaboration on supply chains should include sectors critical to economic and national security, and where there is a clear dependence on China. Obvious candidates include pharmaceuticals and critical minerals, where China either manufactures a large proportion of inputs or possesses significant reserves and processing capacity. India is a key supplier of pharmaceutical products to the U.S. but is reliant on China for key starting materials. While India has already introduced incentives to onshore the production of inputs, there is space to coordinate industrial policy with the U.S. to fund the co-production of key starting materials and active pharmaceutical ingredients, or establish a strategic pharmaceutical ingredient reserve. Similarly, India's vast critical mineral reserves (rare earths, cobalt, and graphite) and push for domestic production could provide an opportunity for the U.S. to fund and transfer technology for refining projects in exchange for security of supply agreements. Building resilience against Chinese economic coercion also includes anticipating and mitigating the risk of Chinese capital in domestic markets while simultaneously filling the gap through bilateral investment. While both countries have robust investment screening frameworks, India has pursued a significantly more restrictive policy toward Chinese FDI since a border clash in 2020. Attitudes in Delhi may be softening, however, as India needs foreign investment to build out domestic manufacturing. To court investments from the U.S., Indian officials must consider expanding the automatic route for FDI approvals to more sectors, including raising the 74 percent cap for the burgeoning defense industry, and reducing tax rates for U.S. firms investing in target sectors and regions. Although FDI from India pales in comparison to that from China ($4.6 billion vs $28 billion in 2023), Washington should include Indian investment into a proposed CFIUS fast track to ensure it capitalizes on the growth of the world's fourth-largest economy. To win the global technology race, the U.S. must also look to India, among other allies, to manufacture and adopt advanced technologies. Capturing the market of the world's most populous country, after all, is perhaps the only way to achieve global adoption of tech platforms like AI and quantum based on U.S. IP. The above-mentioned reforms are key to increasing investment and developing secure supply chains, but the core problem of technology and knowledge transfer remains. The scrapping of the 'AI Diffusion Rule' is a step forward in increasing access to advanced chips among partners like India and Singapore, and the Trump administration should prioritize such countries in negotiations relaxing export controls for advanced tech. Given that Washington will be rightfully concerned about the flow of these chips to Russia and Iran, New Delhi should consider increasing resources to the Directorate General of Foreign Trade and customs authorities to better enforce the SCOMET (special chemicals, organisms, materials, equipment, and technologies) list and implementing contractual solutions that impose liabilities on exporters shipping to Russia or Iran. While the U.S. and India often clash on tariffs and market access, a broader trade agreement including concrete provisions for cooperation on key supply chains, foreign investment, and advanced technologies may help them move past enduring pain points and more effectively counter China's coercive practices.
Hindustan Times
03-05-2025
- Politics
- Hindustan Times
Terror crosses borders, so must consequences
In the orchestra of global affairs, silence is complicity. John F Kennedy famously said, 'Geography has made us neighbours. History has made us friends. Economics has made us partners and necessity has made us allies. Those whom God has so joined together, let no man put asunder.' India needs to roar to teach a few strong and reverse lessons on geography, history, and economics to its neighbour. When violence, criminality, and bloodshed cross borders, no country can afford to remain a silent spectator. Enough of playing second fiddle to global laziness, it is time to draw the bow and create a symphony of consequences. Firstly, Pakistan needs to be hit at its most vulnerable nerve — its economic underbelly. The economy is the spinal cord of any terror network, and Pakistan's is no exception. Instruments such as the Generalized System of Preferences (GSP)+ status (European Union giving trade preferences to countries, including Pakistan) and the Financial Action Task Force (FATF) Grey List (penalising nations promoting terrorism) must be leveraged against Pakistan. Yet, the real rot lies deeper. The UN Drugs and Crime Office (UNODC) has underlined that close to 90% of the raw material for heroin originates from Afghanistan. Pakistan's Inter-Services Intelligence (ISI) transports this opium, processes it into heroin, and rakes in blood money — fortunes that are then laundered abroad and funnelled into terror coffers. India must declare an all-out war on this narcotics empire. A coordinated strike — with the Border Security Force, the Indian Navy, Coast Guard and other agencies — should choke the drug routes at sea and land, cutting off the oxygen supply to the ISI's terror tentacles. As is said, 'Cut off the head of the snake, and the body will wither.' Thirdly, at the global stage, we must redouble our efforts to hold Pakistan accountable under UN Security Council Resolutions 1267 and 1373 — mechanisms designed to cripple terrorism at its source. Fourthly, it is high time the UN Military Observer Group in India and Pakistan be shown the door. If diplomatic eviction is not immediately feasible, India must ban its operations outright. This toothless tiger has prowled aimlessly for decades — now, it must kick the bucket once and for all. Fifthly, Pakistan remains a cauldron of cruelty at the internal front. Ethnicities and communities like the Hazaras and Ahmadiyyas live under the sword arbitrary detentions and enforced disappearances. India must extend a similar moral and diplomatic embrace to these groups as also to the Uyghurs in China, who have repeatedly stood shoulder to shoulder with India, including after Pahalgam. As the idiom goes, 'Charity begins at home, but justice must travel far and wide.' Sixthly, another layer of danger emerging is the unholy trinity of Pakistan, Turkey, and Malaysia. This axis, masquerading as saviours of the Ummah, has historically left a trail of blood — from the Armenian genocide to the persecution of Greeks, Assyrians, and now Kashmiris. Meanwhile, Saudi Arabia and its allies have blossomed into India's strategic and cultural partners. India must not merely stand at the crossroads; it must take the high road by creating a coalition of civilisations — a league of nations that have been victims of genocides and terrorism, united not by grievances alone, but by a shared pledge to anti-terror memory and justice. Seventhly, while the world erects grand memorials — the Holocaust Museum in Washington, the Armenian Genocide Museum in Yerevan — India remains amnesiac about the horrors inflicted upon it. The time is ripe for a Terror Museum in Srinagar — a living, breathing testimony to Pakistan's decades-long jihad against Kashmir and India. Let the world bear witness. Let history be etched in marble and memory. Eighthly, India must actively support the dissident voices from Pakistan-occupied Kashmir (PoK) and Gilgit-Baltistan. Those hounded out by Pakistan's Punjabi-dominated military elite must be empowered to establish governments-in-exile. If Jawaharlal Nehru could lay the groundwork for the Tibetan government-in-exile in the 1950s, the Narendra Modi government can surely walk in those footsteps today. Lastly, India must unleash its digital warriors. Even more than human intelligence, we are among the best in technical intelligence. There is also a need to launch a digital strike. Without firing a single bullet, we can paralyse enemy infrastructure, leak military secrets, and confound adversary narratives. As the winds of digital warfare blow stronger, India must remember: When terror crosses borders, so must consequences — swiftly, silently, and surgically. In this long-drawn chess game of survival and supremacy, India must think three moves ahead. We must not only play defence but also script an audacious offensive across land, seas, airwaves, and public minds. For too long, Pakistan has mistaken our patience for passivity. It is time to break the illusion, hit hard wherever and whenever necessary, and exhibit the might of India. The process of these nine initiatives must be a continuous, ongoing process, not a reactive move against another Uri or Pahalgam. History is unkind to those who stand at the water's edge, watching the tides of change pass by them. It rewards those who ride the storm and reshape the shoreline. Abhishek Singhvi is a fourth term MP, jurist, former chair, Parliamentary Standing Committees on Commerce, Law and Home, and former additional solicitor general of India. He is also member, Congress Working Committee, senior national spokesperson, Congress, and chair of the party's department on law, human rights & RTI. Akash Kumar Singh is a PhD scholar at the Special Centre for National Security Studies, JNU and a former LAMP fellow. The views expressed are personal
Associated Press
04-04-2025
- Business
- Associated Press
AmCham Kosovo Urges Kosovo to Lift Tariffs on US Goods
Kosovo to consider removing customs tariffs on American products Pristina, Kosovo--(Newsfile Corp. - April 4, 2025) - The American Chamber of Commerce in Kosovo issues the following statement: In light of the recent decision of the U.S. Administration to introduce a new tariff structure on imported goods, the American Chamber of Commerce in Kosovo believes that this is the right moment for Kosovo to consider imposing a unilateral trade preferential arrangement with the United States, by zeroing the customs tariffs on goods imported from the U.S. To view an enhanced version of this graphic, please visit: While Kosovo has benefited for several years from duty-free access for over 3,500 products under the U.S. Generalized System of Preferences (GSP), goods exported from the United States to Kosovo continue to be subject to customs duties. Removing these tariffs would mark an important and forward-looking step toward deepening trade relations with the United States-Kosovo's closest strategic and economic partner. This measure would serve as a clear demonstration of Kosovo's readiness to deepen bilateral economic ties and its commitment to shared values of free and fair trade. It would also help position Kosovo favorably in future efforts to pursue a formal Free Trade Agreement with the United States. The American Chamber of Commerce in Kosovo encourages the Government of Kosovo to act decisively in this regard and reaffirms its readiness to support institutional efforts aimed at enhancing economic cooperation, attracting U.S. investment, and creating greater market access for both Kosovar and American businesses.
