American President Donald Trump terminated India's designation as a beneficiary developing nation under the key GSP (Generalized System of Preference) trade programme on the ground that it has not assured the US that it will provide "equitable and reasonable access to its markets."

The 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," Trump said on Friday ignoring the plea made by several top American lawmakers.

Earlier this year, on 4 March, Trump announced his intentions to terminate India's designations as a beneficiary developing country under the GSP programme. The 60-day notice period on the same ended on 3 May.

Despite India's intentions to negotiate terms, the decision was ill-timed as the country was in the midst of its general elections during the April-May period.

India was the world's largest beneficiary of the programme. It made exports worth $5.7 billion to the US with duty-free status in 2017.

The country has been a beneficiary of GSP since the 1970s, and ending its participation would not only be the strongest punitive action against India since Trump took office, but would also open a new front in the global trade war.

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

Meanwhile, India had said that the US government's move to withdraw duty concessions on certain products under the GSP programme will not have a significant impact on exports to America as the benefits were only about $190 million annually.

With inputs from PTI