GSP is the largest and oldest US trade preference programme.

Highlights The US will end preferential trade status for India next week

India says it will always uphold its national interest in trade matters

Trump ignored requests by top US lawmakers to reverse the decision

India will "always uphold its national interest" in trade matters as "our people also aspire for better standards of living", the government said today in response to US President Donald Trump ending India's designation as a beneficiary nation under a key preferential trade programme.

"India as part of our bilateral trade discussions, had offered resolution on significant US requests in an effort to find a mutually acceptable way forward. It is unfortunate that this did not find acceptance by the US," the government said in a statement.

The Generalised System of Preference (GSP) is the largest and oldest US trade preference programme and is designed to promote economic development by allowing duty-free entry for thousands of products from designated beneficiary countries.

"I have determined that India has not assured the US that it will provide equitable and reasonable access to its markets. Accordingly, it is appropriate to terminate India's designation as a beneficiary developing country effective June 5, 2019," said Mr Trump on Friday, ignoring requests made by several top American lawmakers to reverse the decision as it may harm American businesses.

In a statement, the Coalition for GSP executive director Dan Anthony said Mr Trump's decision will cost American businesses over $300 million in additional tariffs every year, news agency PTI reported.

Under the GSP programme, nearly 2,000 products including auto components and textile materials can enter the US duty-free if the beneficiary developing countries meet the eligibility criteria established by the US Congress.

India was the largest beneficiary of the programme in 2017 with $5.7 billion in imports to the US given duty-free status, according to a Congressional Research Service report in January.

"India, like the US and other nations shall always uphold its national interest in these matters. We have significant development imperatives and concerns and our people also aspire for better standards of living. This will remain the guiding factor in the Government's approach," the government said on Saturday, two days after Prime Minister Narendra Modi took the oath for a second term.

Without GSP benefits, American small businesses face a new tax that will mean job losses, cancelled investments and cost increases for consumers, said Dan Anthony. "They (Trump administration) also acted despite India's willingness to negotiate new market access for American exports. Thus, there are no winners from today's decision. American importers will pay more, while some American exporters will continue to face current market access barriers in India and others, including farmers, are very likely to be subject to new retaliatory tariff," Mr Anthony said, according to PTI.

The Trump administration launched the eligibility review of India's compliance with the GSP market access criterion in April 2018.