The US plans to end preferential trade status for India, under a scheme which allows certain products to enter the US duty-free.
President Donald Trump said India had failed to assure the US it would provide reasonable access to its markets.
India said the US move would have a “minimal economic impact”.The US will also end Turkey’s preferential trade status, saying it no longer qualifies.
It is the latest US attempt to counter what it sees as unfair trade practices. Mr Trump has pledged to reduce US trade deficits, and has repeatedly called out India for high tariffs.
As a result, he directed the US Trade Representative’s (USTR) office to remove India from a programme that grants it preferential trade treatment.
Preferential trade treatment for India currently allows $5.6bn (£4.3bn) worth of exports to enter the United States duty free.
In a letter to Congress, the US president said India had “not assured the United States that it will provide equitable and reasonable access to the markets of India”.
Under the Generalised System of Preferences (GSP) programme, “certain products can enter the US duty-free if the beneficiary developing country meets a set of criteria established by Congress”.
The criteria include providing intellectual property protection, and giving the US reasonable and fair market access.
India’s Commerce Secretary Anup Wadhawan said the withdrawal from the GSP would have “minimal economic impact of $190m (£144m) on India”.
“Our trade relations remain cordial with the US. There is no disruption on trade talks,” Mr Wadhawan said.
