US President Donald Trump looks set to open a new front in his trade wars with a plan to end preferential trade treatment for India that allows duty-free entry for up to $5.6 billion ($A7.9 billion) worth of its exports to the United States.
India played down the impact of the move, saying it was keeping retaliatory tariffs out of its talks with the US, but the opposition could seize on the issue to embarrass Prime Minister Narendra Modi ahead of general elections this year.
Trump, who has vowed to cut US trade deficits, has repeatedly called out India for its high tariffs, and US trade officials said scrapping the concessions would take at least 60 days after notifications to Congress and the Indian government.
"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 in a letter to congressional leaders.
India is the world's largest beneficiary of the GSP program which dates from the 1970s and ending its participation would be the strongest punitive action for the South Asian nation since Trump took office in 2017.
Reuters last month reported the planned US action, which comes as the United States and China appear close to a deal that would roll back US tariffs on at least $US200 billion worth of Chinese goods.
The US Trade Representative's Office said removing India from the Generalised System of Preferences (GSP) program would not take effect for at least 60 days after the notifications, and would be done through a presidential proclamation.
Farm, marine and handicraft products are among India's exports most likely to be hit by the US step, Ajay Sahai, the director general of the Federation of Indian Export Organisations, told Reuters.
The preferential trade treatment brings India an annual "actual benefit" of just $US190 million, Commerce Secretary Anup Wadhawan said, adding that the country does not plan retaliatory tariffs.
Of the 3700 products it covers, India made use of the concession for just 1784, Wadhawan told a news conference in the Indian capital. Countries not covered by the GSP face US tariffs of 2 per cent and upwards.
While impact from the GSP withdrawal will be limited, it could hurt Modi's Hindu nationalist ruling party ahead of the election expected in the next couple of months.
Trade ties with the US suffered after India unveiled new rules on e-commerce limiting the way internet retail giants Amazon.com Inc and Walmart Inc-backed Flipkart do business.
That followed a drive by New Delhi to force global card payments companies such as Mastercard Inc and Visa Inc to move their data to India and higher tariffs on electronic products and smartphones.
