GSP?

India-U.S. bilateral relations have developed into a "global strategic partnership", based on

shared democratic values and increasing convergence of interests on bilateral, regional and
global issues.

Trade between India and the US

The emphasis placed by the Government in India on the development and good
governance has created an opportunity to reinvigorate bilateral ties and enhance cooperation under the motto --- “ChaleinSaathSaath: Forward Together We Go”, and "SanjhaPrayas, Sab ka Vikas" (Shared Effort, Progress for All) adopted during the first two summits of Prime Minister Modi and President Obama in September 2014 and January 2015 respectively. The summit level joint statement issued in June 2016 called the India-U.S. relationship an “Enduring Global Partners in the 21st Century”.

U.S President Donald trump is all set to end the ongoing preferential trade treatment for India. According to Mr president, India is the topmost beneficiary of the GSP (Generalized System of Preferences) and in return, India is not facilitating them with the same. The tariff on 1784 (out of 3700 on which the GSP was used by India) products from India will now be imposed.

President Trump has repeatedly called out India for its high tariffs, and U.S. trade officials said scrapping the concessions would take at least 60 days after notifications to Congress and the Indian government.

What is the Generalized System of Preferences (GSP)?

The Generalized System of Preferences (GSP) is a U.S. trade program designed to promote economic growth in the developing world by providing preferential duty-free entry for up to 4,800 products from 129 designated beneficiary countries and territories. GSP was instituted on January 1, 1976, by the Trade Act of 1974.

From where the problems arose?

Trade ties with the United States suffered after India adopted new rules on e-commerce curbing how internet retail majors Amazon.com and Walmart Inc-backed Flipkart do business.
That followed a drive-by New Delhi to force global card payments companies such as Mastercard Inc and Visa Inc to move their data to India and higher tariffs on electronic products and smartphones.

Impact on India

Although, the Indians are claiming it isn't going to have a deep impact as it only affects $190 million but there is another side and that is important and it is political.

“It can become a political issue in an election year,”

Despite its limited impact, the GSP removal could hurt Modi’s Hindu nationalist ruling party ahead of the election, expected in the next couple of months.