Customs duty cuts in certain areas to benefit American exports: GTRI

The customs duty reduction announced in the Budget on products such as motorcycles and synthetic flavouring essences would benefit American exports, economic think tank GTRI said on Sunday.

The Global Trade Research Initiative (GTRI) said that despite the repeated criticism of India as the biggest tariff abuser and tariff king by the Trump-administration, the country's Budget has introduced significant tariff reductions on multiple products, many of which benefit the US exports.

"With key tariff cuts on technology, automobiles, industrial inputs, and waste imports, India appears to be taking steps toward facilitating trade even as the global trade environment remains tense. Whether these reductions will alter Washington's view of India's trade practices or become a point of contention in the US election cycle remains to be seen," it added.

Among the key tariff reductions, India lowered the duty on fish hydrolysate for the manufacturing of aquatic feed from 15 per cent to 5 per cent, a move that directly impacts US exports, which amounted to $35 million in 2023-24.

For the automobile sector, India has reduced tariffs on motorcycles based on engine capacity.

For motorcycles with an engine capacity below 1,600cc, the tariff has been cut from 50 per cent to 40 per cent, while for motorcycles above 1,600cc, the tariff has been slashed from 50 per cent to 30 per cent.

"The US motorcycle exports to India stood at $3 million in FY24, and this tariff cut could help expand market access for American manufacturers," the GTRI said.

Similarly, it said, tariff cut on ethernet switches (carrier-grade) under the others category from 20 per cent to 10 per cent would help American exporters.

The US exported $653.4 million worth of these products to India in the last fiscal, "making this a significant trade benefit", GTRI Founder Ajay Srivastava said.

India has also lowered the duties on synthetic flavouring essences from 100 per cent to 20 per cent, a category in which Washington exports stood at $21 million in FY24.

"In the space sector, tariffs on ground installation for satellites, including spares and consumables, have been reduced to zero, benefiting American exporters who supplied $92 million worth of these products in FY23," Srivastava said.

However, in the last financial year, these imports dropped significantly to $0.07 million, suggesting a sharp decline in trade activity in this category.

Additionally, the Budget has proposed elimination of tariffs on specific waste and scrap items, reducing duties from 5 per cent to zero.

America exported a total of $2.5 billion worth of waste and scrap of all types to India in 2023-24.

"While Trump has long criticised India's tariff structure, these latest reductions indicate a shift in policy that could boost US exports across multiple sectors," Srivastava said.

During April-November 2024-25, the US was the second largest trading partner of India with $82.52 billion bilateral trade in goods ($52.89 billion worth of exports, $29.63 billion of imports and $23.26 billion trade surplus). During 2021-24, America was the largest trading partner of India.