India's Import Duties Compliant with WTO Rules, Must Clarify Position to US: GTRI

New Delhi, March 2, 2025: India's import duties are fully compliant with global trade regulations outlined by the World Trade Organisation (WTO), and the government must clearly communicate this stance to the United States administration, according to the Global Trade Research Initiative (GTRI), an economic think tank.

GTRI’s founder, Ajay Srivastava, emphasized on Sunday that India’s tariffs were formulated and approved under a unanimous agreement at the WTO in 1995. He highlighted that developed nations, including the US, had agreed at the time to allow developing countries to maintain higher import duties in return for commitments on intellectual property rights, agricultural regulations, and trade in services—areas historically favoring wealthier economies.

"India’s tariffs are consistent with WTO rules. They are the result of a single undertaking at the WTO, approved by all members including the US. The Indian side needs to explain this clearly to the US," Srivastava stated.

Challenges in India-US Free Trade Agreement Negotiations​

Discussing potential negotiations on a comprehensive Free Trade Agreement (FTA) between India and the US, GTRI highlighted significant challenges. The think tank explained that the US might pressure India into:

• Allowing American firms access to government procurement contracts.
• Reducing agricultural subsidies significantly.
• Weakening patent protections through allowance of "evergreening".
• Removing current restrictions on cross-border data flows.

India has consistently resisted these demands over decades and remains unprepared to accept such conditions, GTRI noted.

Allegations of High Tariffs by Former US President Trump​

The context of these statements arises from repeated criticism by former US President Donald Trump, who has frequently accused India of imposing excessively high tariffs, labeling it as a "tariff king" and "tariff abuser."

However, Srivastava argued that Trump's criticism overlooks historical commitments at the WTO, which explicitly permitted developing countries to implement higher tariffs in exchange for agreeing to specific rules that disproportionately benefited developed economies.

"Trump conveniently forgets this while talking about India's tariffs," Srivastava remarked.

Low Local Value Addition in Exports to US​

Addressing the US's concerns over trade deficits, the think tank also underlined that India's exports to the United States often involve goods with low domestic value addition. Products such as iPhones, solar panels, diamonds, and petrochemicals typically contain minimal local value inputs, indicating that raw trade numbers might present an incomplete or skewed picture of the actual economic benefit to India.

India's Strategic Options Amid US Tariff Threats​

In response to potential threats of retaliatory tariffs by the US, GTRI suggested India could consider offering zero tariffs on the majority of industrial goods imported from America. Alternatively, India might opt to absorb US tariffs without retaliating—akin to the legendary action of Shiva, who "consumed poison without swallowing it."

However, the report strongly cautioned against pursuing lengthy FTA negotiations with the US, noting that by the time an agreement is reached, reciprocal tariffs by the US administration could have already rendered such agreements ineffective.

"FTA negotiations will take time, and by then, the US may already have imposed reciprocal tariffs, undermining any potential benefits. Hence, this approach is not advisable," the think tank concluded.