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India cautious on trade sanctions by the US; may negotiate

The matter would be taken up for discussion on June 6 in the meeting between Commerce Minister Piyush Goyal and trade associations.

New Delhi: After the trade sanctions imposed by the United States, India is carefully looking at means to calm things down. Bloomberg has reported that India may negotiate terms with the USA after the latter withdrew the duty-free status of 2000 products being exported by the former.

The concession granted to India was not mandated by any trade agreement or treaty but offered voluntarily by the USA. This is the reason India may not retaliate by raising tariffs on the imports from the USA. Any retaliation would put India in a bad light under World Trade Organisation norms.

The matter would be taken up for discussion on June 6 in the meeting between Commerce Minister Piyush Goyal and various trade associations.

Last year, when the USA imposed higher tariffs on imports from India, the reciprocal message was sent from India following the steps taken by the European Union and China.

The recent move ended concession to goods amounting to $5.7 billion that India shipped to the USA. The items included jewelry, leather goods, pharmaceuticals, chemical and other farm produce.

The reason India is unable to actively deal with trade disputes is because of its reliance on the USA for defence deals. The USA has been leading a group of nations including Australia and Japan to contain China’s growth in the region.

"Given the rising tempo of U.S.-India strategic ties on matters chiefly pertaining to defense interoperability, India may take a tempered approach," said Kashish Parpiani, a fellow at Observer Research Foundation, a private think-tank.

The USA's arms exports to India rose by over 550% in the five years to 2017, making it India's second-largest arms supplier, Parpiani said.

India tried to reduce the $21 billion trade surplus with the USA by stepping up imports from America. It termed the withdrawal of benefits as "unfortunate".

While India will continue to work on improving ties with the USA, its trade decisions would be guided by its own "development imperatives and concerns," India's trade ministry said.

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