ECONOMY
India set to slash Import Duty further to avoid high tariffs from the US
- IBJ Bureau
- Feb 18, 2025
India’s top officials have said that they will continue to cut import taxes as the government looks to work around US President Donald Trump’s plan to impose reciprocal tariffs on trading partners.
Weeks after she unveiled sweeping cuts to duties on imports from textiles to motorcycles, Finance Minister Nirmala Sitharaman said that she will carry on the process of reforming the nation’s tariff regime.
“We are building to be an investor-friendly country, and as a result, the duty cuts and the rationalisation that have been announced is a continuing process, and we shall keep doing that,” Mr Sitharaman said at an event in Mumbai on Monday.
Economists have said that India’s higher tariff rate and a $41-billion trade surplus with the US makes the South Asian nation among the most exposed to risks if Trump follows through with plans to impose like-for-like tariffs. Analysts from Mitsubishi UFJ Financial Group have said that US tariffs on India could rise to above 15 per cent from around 3 per cent currently, “if full reciprocity were enforced in theory.”
While it is still unclear how the Trump administration will calculate tit-for-tat levies, if the US were to impose a 20 per cent flat tariff on Indian exports, it could result in a loss of 50 basis points to gross domestic product, according to Soumya Kanti Ghosh, chief economic adviser at State Bank of India. An average hike of 15 per cent-20 per cent in tariffs could reduce India’s overall exports to the US by 3-3.5 per cent, he said.
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