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Trade relations between India and the United States are getting deteriorated as Washington on June 5 pulled back benefits for Indian exporters under the GPS (Generalised System of Preferences) programme.

After retaliating against the US withdrawal of preferential treatment of $5.6 billion for its exports, India plans to counter Washington’s growing protectionism with two pieces of legislation that can have an extensive impact on American firms. And doing tit-for-tat over this fresh trade war, India imposed retaliatory tariffs on 28 American products which import from the United States.

With the two proposed legislation, the e-commerce policy intended to streamline online trade, which is led by social networking giants Facebook, Twitter, search engine giant Google, e-commerce giants Amazon and Flipkart.

The proposed Personal Data Protection Bill calls for companies to safeguard personal data of Indians, including health and financial data, caste, religious or political affiliation, sexual orientation, and biometrics, by storing all data in India, according to government and industry officials.

Since the strategic partnership and cooperation between both nations on key issues such as counterterrorism continue to be robust, the Indian side is looking to the visit by secretary of state Mike Pompeo on June 25-26 to pour oil on troubled waters on several trade matters that have become irritants, including the US sanctions on Iranian oil imports, the ending of GSP benefits, and tariffs.

According to officials, MNCs, particularly American ones, are lobbying for this liberal e-commerce policy with virtual autonomy in possession and use of private data, which the proposed legislation aim to regulate. The proposed laws undertake significance as the two countries are likely to negotiate decisive trade-related issues when Pompeo holds meetings in New Delhi on June 26.

The reports further claimed that Pompeo will also meet Prime Minister Narendra Modi and national security adviser Ajit Doval, besides discussions with his Indian counterpart S Jaishankar. It’s also believed that these meetings will prepare the grounds for the meeting between the PM Narendra Modi and the US President Donald Trump, which is slated on the G20 summit in Osaka, Japan, on June 28-29.

After India’s $5.6 billion trade concessions by the US under the GSP programme, Sensex on Friday last week skidded off and closed nearly 290 points lower. The fresh tension also now leads to slowdown concerns in the Indian markets.

India exports more to the US than it imports that brings much-needed dollar inflows into the country. According to US government data, India ranks 9th on the list of trading partners that run a trade surplus with the US. In this term, China, Mexico, and Japan lead the list and even Vietnam runs a higher surplus against the US than India does.

Last year, the US levied duties on steel and aluminium from India following which retaliation was deferred until now.