FM rebuts US claim of high tariffs on imports
New Delhi : Union finance minister Nirmala Sitharaman on Tuesday refuted United States president Donald Trump's charge that India is the 'tariff king' in imposing high duties on American goods, contending that effective levies in India are far lower than the notified rates. Union finance minister Nirmala Sitharaman, (File photo) (PIB)
Continuing reforms to encourage domestic value-addition, India on February 1 announced removing seven tariff rates on industrial goods in the FY26 budget, leaving only eight rates in place that include the zero duty, she said at the Trade Conclave 2025 organised by the Exim Bank in New Delhi.
Referring to the Union budget 2025-26, she said it rationalised customs tariff structure for industrial goods and removed seven tariff rates. Without any specific reference to the US president, she said: 'For all of us, or those of us who still believe in the commentary which was made in the US that India may be the tariff King. No, I want two things to be remembered. Given as system of things we seek Parliamentary approval for deciding on the tariff rate. You obtain from the Parliament the permission to go up to a certain level, but effectively, you are at a far lower level.'
'Effective rate is at a far lower level. But what gets published in the gazette would be that level for which you obtain permission from the Parliament. And it is that level which appears everywhere…,' she said, explaining that the levies notified in the gazette are the upper limit while effective duties are often less than the cap.
Articulating reforms in customs duty structure in her budget speech on February 1, Sitharaman said: 'As a part of comprehensive review of Customs rate structure announced in July 2024 Budget, I propose to: (i) remove seven tariff rates. This is over and above the seven tariff rates removed in the 2023-24 budget. After this, there will be only eight remaining tariff rates including 'zero' rate.'
An official who did not wish to be named said customs duty rationalisation is one of the key reforms of the government. 'Average customs duty in India has come down to 10.66%, which is closer to the rates prevailing in Asian countries. So, the narrative that India's customs duties are very high is wrong. In fact, most of the American goods enter India within the effective customs duty band of 0-10%,' he said.
'President Trump's remark about India is not new. He used the tag of 'tariff king' for India even in his first term. Since then, India undertook several customs reforms and even reduced tariffs on specific items of American interests such as automobiles, pharmaceuticals and Bourbon whisky. Seems, he is fixated in his opinion,' the official mentioned above said. According to a Hindustan Times report from Washington, published on October 2, 2018, Trump made his comments referring to India imposing 100% duty on iconic motorcycle, Harley-Davidson. Since then, import duties on bikes up to 1,600 cc and above 1,600 cc have been slashed to 40% and 30%, respectively.
Union finance minister's comments came at a time when India and the US are negotiating an early harvest deal within a comprehensive Bilateral Trade Agreement (BTA) and talks are mainly focused on reducing tariff and non-tariff barriers for mutual benefit.
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