No pre-emptive tariff overhaul

Over a few years to FY23, India had seen a significant tariff escalation, reversing the trend of progressive reduction of these import barriers, primarily in the wake of the pandemic.

The simple average of import tariffs maintained by India had risen from a low of 13% (10.1% for non-agricultural or industrial goods) in 2009 to 18.1% (14.7%) in 2023.

Import tariff is the basic customs duty (BCD) applied on items identified on the basis of a six-digit harmonised commodity description and coding system (HS Code); other imposts on inward shipments, including the integrated GST, are meant to replicate taxes suffered by domestic goods and services.

Thanks to the steps taken in the FY25 Budget, the average tariff rate of the country came down, and is around 17% now.

This is much higher than the US' 3.3%, but is comparable to other major economies like South Korea (13.4%) and China (7.5%).

However, the US, too, keeps high tariffs on certain items to protect domestic producers.