President Donald Trump announced on May 31 that the United States is ending India’s designation as a beneficiary developing nation under the generalised system of preference (GSP) scheme after concluding India has not assured the United States that it will provide ‘equitable and reasonable access to its markets’. India’s status will end on June 5. GSP is the largest and oldest US trade preference programme.

India was the largest beneficiary of this scheme in 2017 with $5.7 billion in duty-free imports to the United States.  “I have determined that India has not assured the US that it will provide equitable and reasonable access to its markets. Accordingly, it is appropriate to terminate India’s designation as a beneficiary developing country effective June 5, 2019,” Trump said in a proclamation, ignoring the plea made by several top US lawmakers. On March 4, Trump announced his intention regarding such an action. The 60-day notice period ended on May 3. In a statement, Coalition for GSP executive director Dan Anthony said Trump’s decision will cost American businesses over $300 million in additional tariffs every year, according to global newswires. “Without GSP benefits American small businesses face a new tax that will mean job losses, cancelled investments and cost increases for consumers. Only a year after the Senate and House passed a three year reauthorization of the GSP by a near unanimous margin, the Trump administration has kicked out the GSP country that saves American companies more money than any other,” he said.

Indian textiles and clothing that fall under harmonized tariff schedule starting with 42, 50, 51, 52, 53, 54, 56, 57, 59, 61, 62 and 63 would be affected once the US terminates India’s designation as a GSP beneficiary country.