The Central Board of Indirect Taxes & Customs (CBIC) has taken steps to improve India’s tariff structure by removing several high tariff rates that impacted the perception of India’s trade policies.
Sanjay Kumar Agarwal, Chairman, Central Board of Indirect Taxes & Customs (CBIC) stated this restructuring involved the elimination of 7 high tariff rates, focusing on industrial goods while excluding agriculture and textiles.
Out of approximately 12,500 tariff lines, around 8,500 pertaining to industrial goods underwent review.
As a result of these changes, the average customs duty rates have been reduced from 11.65% to 10.66%, aligning more closely with ASEAN countries. The move addresses criticism about India’s high tariff rates, although many imports, particularly from the U.S., already fall within a 0% to 10% band.
In Budget 2025, FM Sitharaman announced adjustments in tariff rates for various automotive imports while keeping the effective duty rates unchanged in some cases.
However, states may see reduced tax shares as increased cesses, such as those for agriculture and infrastructure, offset these reductions.
The government has increased the agriculture infrastructure and development cess (AIDC) and reduced the basic customs duties. This approach ensures that a single item is subject to either a cess or a surcharge but not both, resulting in the exemption of surcharges on 82 tariff lines.
To avoid abrupt impacts on the industry, AIDC has been imposed at rates equivalent to or lower than previous tariff levels on select items. The number of high-tariff goods has been minimised, with AIDC strategically applied for short-term protection until further stakeholder consultations guide potential adjustments.
Regarding steel imports, Agarwal stated that the focus is on targeted measures such as anti-dumping or safeguard duties instead of broad tariff increases, which could damage India’s trade reputation.
He adds, investigations into steel imports are being handled by the Directorate General of Trade Remedies (DGTR).
