 "Govt presses on policy to shield local industries amid Trump tariffs threat")
India's tariff policy aims to regulate trade, protect local industries, and generate revenue via taxes on imported and exported goods, Union minister Jitin Prasada told the Lok Sabha on Tuesday. His reply comes a day before US President Donald Trump's proposed reciprocal tariffs come into effect.
Prasada, the minister of state for commerce and industry, informed the House that the government is aware of the recent statements made by NITI Aayog regarding tariffs and their impact on India's economic growth.
"The statement is in line with India's broader strategy for achieving economic growth and making India a more attractive player in the global economy," he said during the Question Hour.
Prasada noted that India is a member of the World Trade Organisation (WTO) and is bound to its maximum tariffs, which can be applied to any given commodity line. He added that these applied tariffs are usually below the bound tariff for a given commodity line.
Notably, a recent report by the United States Trade Representative (USTR) details how India’s tariff and non-tariff policies remain among the most restrictive in major global economies. According to the report, which was published on Monday, India’s WTO-bound tariff rates on agricultural products are also among the highest in the world, averaging 113.1 per cent and ranging as high as 300 per cent.
India moving towards free trade agreements
Amid the changing trade scenario, India is moving towards having a preferential or free trade agreement, wherein customs tariffs and non-tariff barriers are slashed or eliminated on substantial trade between PTA/FTA members.
Prasad noted that the government has started with comprehensive tariff reforms to correct the inverted duty structures. "Such reforms are designed to reduce production costs, encourage domestic manufacturing, and enhance global competitiveness. However, despite reductions, some domestic industries advocate for higher tariffs to protect against foreign competition," he said.
The recent tariff reductions have provided a crucial boost to local manufacturing and international trade competitiveness across sectors, including electronics and electric vehicles (EVs)/mobile phones. In March 2025, India eliminated import duties on 35 essential items for EV battery production and 28 items for mobile phone manufacturing, the minister noted.
"This move aims to bolster local production and enhance export competitiveness in these sectors. Similarly, import duty reduction on critical minerals is likely to bring in investment in this sector," he said further.
(with inputs from PTI)