Opinion | Wary of China, India draws closer to the US – just not too close, as the loss of its special trade status shows

United States President Donald Trump has opened up a new front in his ongoing trade wars by stripping India of its preferential trade status from June 5, after deciding that Delhi was not playing ball in providing market access to American products.

The punitive measure to withdraw products from India from the Generalised System of Preferences will affect US$6.35 billion worth of Indian exports to the US, out of a total of US$51.4 billion in 2018, according to the Federation of Indian Export Organisation. India is the world’s largest beneficiary of the programme, which allows developing economies to export their products duty free to the US.

However, Indian Prime Minister Narendra Modi’s government, freshly re-elected only a fortnight ago, has played down the development, calling it part of a “regular process”.

The trade decision to penalise India is at odds with America’s Indo-Pacific strategy, a report of which was recently unveiled at the Shangri-La Dialogue in Singapore, and which lists India among the major partners of the US in this collective endeavour.

The report, titled “Preparedness, Partnerships, and Promoting a Networked Region”, is the distillate of the Trump security vision for the Indo-Pacific region, and notes that the US and India maintain a “broad-based strategic partnership” and asserts that this has “strengthened significantly during the past two decades, based on a convergence of strategic interests”.