India was the largest beneficiary of the program in 2017 with $5.7 billion in imports to the USA given duty-free status and Turkey the fifth largest with $1.7 billion in covered imports, according to a Congressional Research Service report issued in January.
The US has been pressuring India to reduce duties in the information technology sector, the official said, noting that negotiations continue on a bilateral trade package that would address both sides' concerns.
India has been the biggest beneficiary of the GSP regime and accounted for over a quarter of the goods that got duty-free access into the United States in 2017.
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 in 2017.
Although Trump told USA lawmakers in his letter that he will "continue to assess whether the Government of India is providing equitable and reasonable access to its markets", and the withdrawal will kick in only after 60 days through a presidential proclamation, there is little chance of any deal being salvaged in the two month window.
In a letter to congressional leaders, Trump is reported to have said on Monday, "I am providing notice of my intent to terminate the designation of India as a beneficiary developing country under the GSP program". "The GSP system is envisaged as a non-reciprocal benefit to developing countries". When India sends a motorcycle to us, we charge nothing.More news: Russian Federation seeks to prevent military intervention in Venezuela - upper house speaker
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United States commerce secretary Wilbur Ross recently raised concerns regarding new trade barriers created by India, hinting at the stringent e-commerce rules that affected U.S. companies such as Amazon and Walmart-owned Flipkart. Since starting in the program in 1975, Turkey has shown a growth in income per capita, reduced poverty and more diverse exports, officials said.
"The effect will be minimal at the least to moderate at the most on India's export to the US", said Anup Wadhawan, commerce secretary in the Indian ministry of commerce.
Reacting to the move, a top Indian trade official said New Delhi does not plan to impose retaliatory tariffs on United States goods.
The e-commerce rules followed a drive by New Delhi to force global card payments companies such as Mastercard and Visa to move their data to India and higher tariffs on electronic products and smartphones.
India, however, "has implemented a wide array of trade barriers that create serious negative effects on United States commerce", the statement said.
Under an agreement taking shape, Beijing would lower some barriers on USA companies' operations in China and purchase large amounts American agricultural and energy goods if the United States lowered most of the tariffs in return.