India Likely to Cut More Import Tariffs as Manufacturing Expands
India plans to cut more import taxes as manufacturing grows, aiming to boost domestic industry and strengthen trade ties
India is planning to further reduce import taxes as domestic manufacturing expands. According to ET, Sanjay Agarwal, chairman of the Central Board of Indirect Taxes and Customs (CBIC), said the government will soon consult with different ministries to decide whether more tariff cuts can be made. “As value chains grow deeper, customs duties must be lowered, otherwise inefficiencies will...
India is planning to further reduce import taxes as domestic manufacturing expands. According to ET, Sanjay Agarwal, chairman of the Central Board of Indirect Taxes and Customs (CBIC), said the government will soon consult with different ministries to decide whether more tariff cuts can be made. “As value chains grow deeper, customs duties must be lowered, otherwise inefficiencies will set in,” Agarwal told Bloomberg News.
Recently, India made huge changes to its import tax system, removing high tariffs on around 8,500 industrial goods. The government also reduced import taxes on several products, including Harley-Davidson motorcycles, to improve trade relations with the United States.
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Although some extra levies on imports remain, Agarwal clarified that these surcharges are “temporary in nature” and will eventually be phased out. This means that total import taxes have not yet decreased drastically but they will likely come down over time.
The Indian government believes that lowering import duties will encourage local industries to become more efficient and competitive. By reducing costs on imported raw materials and machinery, Indian manufacturers will be able to produce goods at a lower price, making exports more attractive in global markets.
The decision to cut tariffs comes ahead of Prime Minister Narendra Modi’s visit to the United States next week. The Modi government has been making efforts to improve trade relations with Washington, especially after former US President Donald Trump labeled India as a “tariff king” due to its high import taxes.
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India has also agreed to accept thousands of illegal migrants from the US and continue using the US dollar in trade transactions. With manufacturing gaining momentum, India is gradually lowering its import duties to make its economy more competitive. Some additional taxes remain, for now, the government has assured that they will eventually be removed. As the country prepares for Modi’s visit to the US, these tariff cuts also signal India’s commitment to improving global trade relationships and boosting its domestic industries.
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