US raises concerns over India’s high tariffs and non-tariff barriers in a new report

High tariffs

The report by the US Trade Representative Office termed India’s average Most-Favoured-Nation (MFN) tariffs as one of the highest of any major world economy, with an applied rate of 17 percent.

India’s MFN applied tariff rates are at 13.5 percent for non-agricultural goods and 39.0 percent for agricultural goods.

The USTR report noted that India maintains steeper applied tariffs on a wide range of goods, including vegetable oils (as high as 45 percent); apples, corn, and motorcycles (50 percent); automobiles and flowers (60 percent); natural rubber (70 percent); coffee, raisins, and walnuts (100 percent); and alcoholic beverages (150 percent).

Additionally, the US raised concerns over high basic customs duties levied by India on drug formulations, including life-saving drugs and finished medicines.

Trump’s government notably said that higher duties imposed by India on certain agricultural goods posed significant barriers to trade, such as poultry, potatoes, citrus, almonds, pecans, apples, grapes, canned peaches, chocolate, cookies, and frozen French fries, among others.

“India’s World Trade Organization (WTO) bound tariff rates on agricultural products are among the highest in the world, averaging 113.1 percent and ranging as high as 300 percent. Given the large disparity between WTO bound and applied rates, India has considerable flexibility to change tariff rates for both agricultural and non-agricultural products at any time, creating tremendous uncertainty for US workers, farmers, ranchers, and exporters,” the report added.

The report further said that high tariffs and other requirements hampered market access for US milk and dairy exports to India, one of the largest markets in this sector in the world.

“The US government continues to press the Indian government, including through the TPF, to provide greater access to the Indian dairy market,” the report added.

Import restrictions

The Trump administration raised concerns over the practice of imposing quantitative restrictions on imports of certain products, such as pulses, by India.

While India allows the imports of most pulses without any quantitative restrictions, the opaque and unpredictable nature of India’s application of quantitative restrictions has affected the ability of US exporters to access the market, the report said.

The US, along with other trading partners, has raised concerns over this practice in the WTO before.

Besides goods, the US also flagged concerns about India’s treatment of services. While it lauded the government’s efforts to improve efficiency via the new Patents (Amendment) Rules, 2024, the USTR said that the arbitrary application of the Act threatened businesses.

“Among other concerns, the potential threat of patent revocations and the procedural and discretionary invocation of patentability criteria under the Indian Patents Act impact companies across different sectors,” it said.

Concerns over UPI

The US also raised concerns surrounding the Unified Payments Interface, citing that the policies favoured domestic players over foreign companies operating in the space, especially with regard to the issue of placing a 30 percent market share limit on companies.

The cap deadline was extended for two years until the end of 2026 in December 2024.

“The United States also has expressed concern over plans to expand the adoption of a National Common Mobility Card (NCMC) that only uses a domestic proprietary QR code standard, which disadvantages foreign suppliers. India has not yet shared the domestic qSPARC standard, effectively prohibiting firms from participating in the rollout of the NCMC,” the report stated.