The government has decided to bide time and take a reactive—rather than pre-emptive—approach to the impending tariff threat from the incoming Donald Trump administration in the US, according to official sources. It is unlikely that the FY26 Budget, to be presented in Parliament on February 1, would undertake any anticipatory customs duty restructuring to bring down the tariff levels in response to Trump's charges of India being a "high tariff" nation, these sources said.
At best, routine duty adjustments, including those aimed at further correction of the "inverted duty structure" would be carried out.
Though Trump's inauguration on January 20 will precede the Budget, a senior government functionary said that it remained to be seen what he actually intended to do, and by when. He could go the whole hog as soon as after assuming office, or might adopt a staggered approach, the source noted, underscoring that there wasn't any need for the country to take any pre-emptive measure, or hurry in this regard.
The US president-elect has on multiple occasions called India a major tariff abuser, and threatened the country of strict reciprocal moves. Lately, he reiterated that his tariff policy would not be pared back, denying a Washington Post report, which suggested a rethink.
New Delhi has been maintaining that it has already lowered tariffs significantly, and that those are almost in sync with average global levels. The government has also had to face demands from many industries for tariff protection, a situation which reveals their continued lack of global competitiveness.
Continued on Page 14
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