Government Aims for Strategic Growth Through Tariff Reforms and Trade Agreements
New Delhi, April 1 — Union Minister of State for Commerce and Industry Jitin Prasada reaffirmed in the Lok Sabha on Tuesday that India’s tariff policy is designed to strike a careful balance between regulating trade, protecting domestic industries, and generating government revenue. His remarks came in response to a question about recent statements by NITI Aayog suggesting that reducing tariff protections could spur greater economic growth.Prasada emphasized that the tariff policy forms a key pillar of India's broader economic strategy to position itself as a globally competitive economy.
“The statement is in line with India’s broader strategy for achieving economic growth and making India a more attractive player in the global economy,” he stated during the Question Hour.
Reforms to Streamline Tariffs and Facilitate Trade
The minister highlighted that recent reforms have focused on streamlining India’s tariff structure. He explained that while India is a member of the World Trade Organization (WTO) and bound by the maximum tariffs allowed per commodity, the applied tariffs are typically set below these limits.This framework enables the country to navigate global trade obligations while safeguarding domestic interests.
Push Towards Free Trade and Preferential Agreements
India is currently part of 13 Free Trade Agreements (FTAs) and nine Preferential Trade Agreements (PTAs). Additionally, negotiations are underway with key global players including the European Union, United States, United Kingdom, Oman, New Zealand, and Peru.These agreements aim to reduce or eliminate customs tariffs and non-tariff barriers across significant trade volumes, facilitating greater market access and cooperation among member nations.
Calibrated Approach to Tariff Adjustments
Prasada explained that while reducing tariffs—especially on inputs and intermediate goods—can enhance the competitiveness of domestic manufacturers, the government maintains a calibrated approach to ensure that the interests of both producers and consumers are taken into account.One of the key ongoing initiatives is addressing inverted duty structures, where import duties on raw materials are higher than those on finished products. Correcting this anomaly is essential to lowering production costs and promoting domestic manufacturing.
Tariff Reductions in Strategic Sectors
The minister also outlined recent policy measures taken to boost sectors such as electronics and electric vehicles (EVs). In March 2025, India eliminated import duties on 35 essential items used in EV battery production and 28 components crucial to mobile phone manufacturing.These reforms are aimed at enhancing domestic production capabilities and export competitiveness. Furthermore, reducing import duties on critical minerals is expected to attract greater investment into this high-potential sector.
Striking a Delicate Balance
Despite ongoing tariff reductions, Prasada noted that some domestic industries continue to push for higher tariffs to shield themselves from foreign competition. This underscores the complexity of balancing growth-driven liberalization with protectionist safeguards for vulnerable sectors.India’s evolving tariff strategy reflects a pragmatic blend of protectionism and liberalization—tailored to drive economic growth while remaining aligned with global trade norms.“India's recent tariff reductions have had significant benefit for domestic manufacturing and international trade competitiveness,” he concluded.