India’s government made significant cuts to import tariffs in its budget and signaled it won’t shelter businesses behind protectionist measures, a clear strategy to head off any retaliation from US President Donald Trump who began a new trade war with key partners.
The reduction in import duties covered a range of goods from electronics to textiles, with experts saying it’s the first time India had made such major moves on its tariff structures. A notable change was a cut to import taxes on high-end motorcycles, such as those made by Harley Davidson Inc., an issue routinely raised by Trump since his first term in office.
Finance Secretary Tuhin Kanta Pandey said in an interview Sunday India wants to shed its image of being a protectionist country.
“We are signaling that India is not a tariff king,” he said. “We are indicating that we are a competitive economy and we are open for business.”
India’s move came just a day before Trump announced new tariffs on Canada, Mexico and China, drawing retaliatory action and prompting a selloff in global markets. Bloomberg News had previously reported that New Delhi was evaluating several options, including a trade deal with the US, lower tariffs and importing more American goods to avoid any trade action from Trump. New Delhi also indicated it will help identify and take back undocumented Indian migrants in the US.
The finance secretary said the government’s message to Indian businesses was clear: “don’t get into protectionist mode.” The changes mean India’s average tariff was now 10.66%, down from 11.65% earlier, Sanjay Kumar Agarwal, chairman of the Central Board of Indirect Taxes and Customs, said Monday.
Pratik Jain, a partner at PwC India, said tariff changes were the first major overhaul by India and were “very important, both for simplification and in light of the changing new geopolitical equations.”
“The government has clearly chosen not to use tariff as a protectionist tool despite the increasing geopolitical headwinds to this effect,” he said. “India thus remains keen to be a more integral part of global supply chains, as highlighted in the budget speech.”
Jain said the effective rates on imports of motorcycles have now been reduced by 10%-20% and the move will benefit countries from where India imports the bikes without a free trade agreement, including the US.
The finance secretary also addressed another of Trump’s threats — namely to impose 100% tariffs on the BRICS group of nations if they tried to replace the dollar with a common currency.
“We have no intention to replace the dollar as a currency,” Pandey said. “Also we don’t align with China on the BRICS currency.”
Source Name : Economic Times