4 days ago
‘Tariff King'? The U.S. Got It Wrong – India's Trade Duties Tell A Different Story
New Delhi: U.S. President Donald Trump recently branded India as the 'tariff hing', accusing it of abusing trade duties to shield its markets. But actual trade data paints a vastly different picture.
According to the World Bank, India's simple average tariff sits at 15.98%, but its trade‑weighted average, reflecting what most imported goods actually face, is only 4.6%.
The lower rate reflects the reality that most high tariffs apply to low‑volume sectors such as agriculture or automobiles, while major imports like pharmaceuticals, energy, machinery and chemicals face much lighter duties (typically 5‑8%).
India's imports from the United States in FY 2023‑24 totaled over $42.2 billion, with roughly 75% concentrated in just 100 product lines. Those goods generally attracted low or minimal tariffs. For instance, crude oil and LNG carry a duty of Rs 1.10/tonne and 2.75%, accounting for 18.25% of U.S. imports to India.
Industrial machinery draws a 7.5% tariff; coal faces 5%; medical equipment carries 5‑7.5%; aircraft and parts are charged only 2.5%; and fertilizers go up to 10%.
Thank you to schemes like Special Economic Zones, Export‑Oriented Units and Free Trade Agreements, a fair share of imports enters duty‑free. India has also been gradually reducing tariffs over three decades, from 80.9% in 1990 down to 15.98% in 2023, with the weighted average at just 4.6%.
In January of this year alone, India slashed duties on several U.S. exports such as motorcycles, bourbon whiskey, ethernet switches, synthetic flavourings, fish hydrolysate and abolished a 6% equalisation levy on online services. It also removed retaliatory tariffs on apples, almonds and walnuts.
Global comparisons reinforce India's position as moderate, not excessive. The Word Trade Organisation (WTO) data shows India imposes 0% on most semiconductors and IT hardware, compared with Vietnam's 50%, China's 25% and Indonesia's 30%.
On agricultural tariffs, India averages 33% (with a max of 110‑150%) versus the European Union (EU)'s cap of 261%, Japan's 298% and South Korea's over 800% on certain items. Neighboring economies fare similarly: Bangladesh at 14.1%, Turkiye at 16.2%, Argentina at 13.4%.
India's trade‑weighted rate remains lower than Vietnam's 5.1% and Indonesia's 5.7% and is nearly equal to the EU's 5%.
India's non‑tariff barriers remain modest and predictable. Its Maximum Residue Limits (MRLs) for food products meet or exceed Codex norms in 24 out of 32 cases, compared to Japan and EU standards.
Rules around biotech and veterinary certifications follow science‑based global norms. Contrast that with China's more opaque system of over 2,600 non‑tariff measures, many of which pose challenges for exporters.
Meanwhile, the United States maintains steep tariffs on products like sour cream (average 197%, max 297%), tobacco (average 184%, up to 350%) and peanuts (average 115%, up to 164%). Even cheese tariffs hover near 24% and automobiles average 19%.
India's approach, particularly in agriculture, reflects common international practices aimed at protecting farmers and ensuring food security. Judged by global norms, its tariff strategy aligns more with calculated trade policy than protectionism.
The label of 'tariff king' obscures more than it reveals. India appears far from an outlier. It has phased in trade liberalisation consistently. It negotiates tariff relief for key partners. It removes barriers when possible. Its tariff profile compares favorably even with developed participants in global commerce.
India is not a tariff miser. India is a measured trader.
