Amidst Trump’s tariff war, India slashes peak tariffs from 150% to 70%, to ‘correct bad optics’

Trump tariff war: India has prepared fact-sheet for American diplomats on tariffs on key U.S. products, officials say; import duties on top 30 items from U.S. are all below 7.5%

The latest round of import tariff revisions announced in the Budget have done away with the peak rates of 150%, 125%, and 100% which applied to just five items, but had created “bad optics” about India’s tariff structure, top officials told The Hindu. Such high tariffs have led to criticism of the sort levelled by U.S. President Donald Trump, who has often clubbed India with China as a “tariff abuser”,

While India’s peak custom duty rate is now 70%, the import duties on the top 30 items exported by the U.S. to India — led by crude petroleum, coking coal, aeroplanes, and liquefied natural gas — are minimal, in the range of zero to 7.5%, the Central Board of Indirect Taxes and Customs chairman Sanjay Kumar Agarwal said in an interview with The Hindu.

The rationalisation of tariff rates, bringing them down from 15 to eight slabs including the zero rate, and lowering the rates, should help “correct” the bad “optics” and send a clear signal to the world that “we are not a high-tariff country”, Mr. Agarwal emphasised.

Even as Mr. Trump has notified higher tariffs on imports from Canada, China, and Mexico, Indian officials are learnt to have readied a fact-sheet laying out the country’s tariffs on key U.S. products, some of which have been slashed further in the Budget. This could be presented to American counterparts through diplomatic channels.

Finance Secretary Tuhin Kanta Pandey, who also leads the Department of Revenue, asserted that the government was “autonomously reviewing” India’s customs duty structure to rationalise it, as announced in the last Budget. “But of course, we can always present the facts. Their highest importables are all on lower rates… Even aeroplanes are at 2.5% plus 0.5%, and these are zero-rated if they are imported by scheduled operators,” he pointed out.

“We have finished the peak rates of 150%, 125%, 100%, 40%, 35%, 30%, 25%. Those rate slabs are gone. It’s an indication to both — our industry, as well as to the world — that we are not a high tariff nation. Our average tariff has come down to 10.6% now from about 11.55% earlier,” he said.

“India is very friendly in terms of industrial goods tariffs. We have even reduced the tariffs on motorcycles to make it 30% for bikes with 1600 cc or bigger engines,” Mr. Pandey pointed out.