India Speeds Up Tariff Cuts As Domestic Manufacturing Grows

(MENAFN- KNN India) New Delhi, Feb 7 (KNN) India is accelerating its efforts to lower import tariffs and phase out additional levies as its domestic manufacturing sector strengthens, according to top finance ministry officials.

The move aligns with the government's strategy to improve efficiency in value chains and shed its reputation as a high-tariff economy.

Sanjay Agarwal, chairman of the Central Board of Indirect Taxes and Customs, confirmed that stakeholder consultations would soon begin with various ministries to explore further tariff reductions without harming local industries.

“As our manufacturing capabilities deepen, custom duties must be reduced to avoid inefficiencies,” he told Bloomberg in an interview. However, he refrained from specifying a timeline for the changes.

The latest budget showcased India's commitment to trade liberalization, slashing tariffs on several products, including motorcycles made by Harley-Davidson Inc. This move aims to address concerns raised by the U.S., where former President Donald Trump previously labelled India as the“tariff king.”

In a significant overhaul of its tariff structure, India has removed high import duties on approximately 8,500 industrial goods. While overall tax incidence remains stable due to existing surcharges, Agarwal emphasised that these additional levies are temporary and will be phased out over time.

Historically, India has protected its domestic industries-particularly in automobiles and pharmaceuticals-through high import tariffs and government incentives.

However, with the nation positioning itself as a global manufacturing hub, the government is now prioritising a more open trade policy.

The tariff cuts come just days before Prime Minister Narendra Modi's visit to the U.S., where trade discussions are expected to be a key focus.

As part of broader economic negotiations, India has also agreed to accept thousands of unlawful migrants from the U.S. and maintain the dollar as its primary trading currency, signalling a deeper alignment with American trade policies.

(KNN Bureau)

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