India has been cutting tariffs since 2023: MC Analysis

Ups and downs of India's tariff policy

India has been lowering tariffs on imports from 2023, nearly two years before US President Donald Trump unleashed his eye-for-an-eye worldview of global trade and decided to impose reciprocal tariffs on countries that charge the US higher tariffs.

2023 was the first time when the number of items facing tariff cuts in India was higher than the items witnessing a rise over the last decade. That year, 2.5 percent of the 5,613 items imported into the country witnessed an increase in tariffs, while 5 percent saw a decline from the previous year.

In the recent Union Budget 2025, the government instituted further cuts, reducing tariff lines from 15 to eight and brought down the average customs duty rate from 11.65 to 10.66 percent.

“The perception that India has very high tariffs has been corrected. It has resulted in the average customs rate coming down to 10.66 percent,” Central Board of Indirect Taxes and Customs Chairman Sanjay Kumar Agarwal had told Moneycontrol in an interview post  the budget.

In 2022, 17.8 percent of 5,243 items imported witnessed an increase in tariffs, while 11.3 percent saw a decrease.

If the entire record over the last decade is considered, then more items have witnessed a rise in tariffs than those that have experienced a decline.

Analysis shows that while India reduced tariffs on most of its non-oil imports between 1990 and 2013, a policy reversal saw the country raise tariffs between 2013 and 2023.

Over a fifth (22 percent) of 4,993 products that India imported between 2013 and 2023 witnessed an increase in tariffs, while just 9.4 percent saw a fall in duties during this period.

In contrast, between 2004 and 2013, 84.3 percent of 4,637 product lines, for which data was available, witnessed a fall in tariffs, while just 3.5 percent saw a jump.

Between 1999 and 2004, when the first National Democratic Alliance government under prime minister Atal Bihari Vajpayee came to power, 60.3 percent of 4,886 products witnessed a decline in tariffs, while 15.7 percent saw a tariff increase.

India’s rise in tariffs corresponds with the government’s Make in India initiative announced in September 2014 to promote domestic manufacturing. The government has also struck four trade or comprehensive partnership agreements over the last decade with the United Arab Emirates (UAE), Mauritius, the European Free Trade Association (EFTA),  and Australia.