United States President Donald Trump on Monday said he will end India’s preferential trade treatment under a programme that allows $5.6 billion, around Rs 397 crore, worth of Indian exports to enter the country duty-free, Reuters reported.

“I am providing notice of my intent to terminate the designation of India as a beneficiary developing country under the Generalized System of Preferences [GSP] programme,” Trump said in a letter to congressional leaders.

“I am taking this step because, after intensive engagement between the United States and the Government of India, I have determined that India has not assured the United States that it will provide equitable and reasonable access to the markets of India,” Trump said. “I will continue to assess whether the Government of India is providing equitable and reasonable access to its markets, in accordance with the GSP eligibility criteria.”

In a separate letter, Trump told the Congress of his aim to end the GSP beneficiary designation of Turkey, NBC reported. “In the four-and-a-half decades since Turkey’s designation as a GSP beneficiary developing country, Turkey’s economy has grown and diversified,” he said. “Increases in Gross National Income per capita, declining poverty rates and export diversification by trading partner and by sector are all evidence of Turkey’s increased level of economic development.”

Trump has repeatedly promised to reduce US trade deficits and protested against India’s high tariffs. He had first brought up the matter soon after taking office, during his inaugural address to a joint sitting of the US Congress in 2017, without directly naming India.

At an event on Saturday, he had called for a reciprocal tax. “India is a very high-tariff nation. They charge us a lot,” he had said.

India is the world’s largest beneficiary of the GSP programme and stopping its participation would be the strongest punitive action against India since Trump took office. According to the US Trade Representative’s Office, the US goods and services trade deficit with India was $27.3 billion in 2017.

The US Trade Representative said ending India’s participation from the programme came after its failure to assure the US that it would provide equitable and reasonable access to its markets in numerous sectors. “By statute, these changes may not take effect until at least 60 days after the notifications to Congress and the governments of India and Turkey, and will be enacted by a Presidential Proclamation,” it said in a statement.

‘US move will not have significant impact on Indian exports’

Commerce Secretary Anup Wadhawan that the move will not have any “significant impact” on India’s exports to the United States, Reuters reported. The “actual” duty benefit that India gets under the GSP is only $190 million annually, because India uses the concession for just 1,784 products out of the 3,700 covered, he said.

“Discussions are on with the United States, and given cordial and strong ties, (we are) keeping retaliatory tariffs out of it,” he said. Wadhawan said India’s relations with US remain strong and discussions will continue.

“GoI [Government of India] has to be conscious of our developmental and public welfare interests,” the commerce secretary said. “Our effort was to balance the affordable prices of the medical devices without compromising on public welfare. We have very deep rooted ties with USA. All the issues in the trade domain are on the table for discussions. We will not compromise on affordability of medical devices.”