India Rejects Protectionism, Cuts Motorcycle Tariffs Amid US Trade Tensions
India is not signaling any protectionist intentions, the top bureaucrat in the finance ministry has stated. This follows the reduction of import duties on high-end motorcycles, amidst escalating trade tensions initiated by US President Donald Trump.
The comments come a day after Trump sparked a trade war with sweeping tariffs on Canada, Mexico, and China. While India is not directly targeted, Trump has previously labeled the country as a tariff abuser.
"We don't want to provide any indication of a desire for protectionism," Finance Secretary Tuhin Kanta Pandey told Reuters in an interview. "Our stance is against heightened protection."
Trade and immigration concerns are expected to dominate discussions when Prime Minister Narendra Modi meets with Trump this month. India has sought to appease the Trump administration after accusations that its tariffs harm American businesses.
India's budget has reduced import tariff slabs, lowering average basic customs duties on items such as raw materials for domestic industries. Average import tariffs on essential goods range from zero to 5%, while capital goods face duties between 7.5% and 10%, Pandey explained. A small number of items are subject to higher tax categories.
However, trade analysts remain unconvinced by the sufficiency of these reductions.
"India's average tariffs still far exceed those of the United States, Japan, and China," said Ajay Srivastava, founder of Global Trade Research Initiative. "While India may be reducing peak basic customs duty rates, it is adding surcharges on imports, keeping the overall tax burden elevated."
The Trump administration has further heightened tensions by raising concerns over undocumented Indian immigrants living in the United States. India's foreign ministry is reportedly engaged in dialogue with US authorities on this topic.
India's budget has slashed custom duties on motorcycles, such as Harley-Davidson models, with engine capacities of 1,600 cc or more, from 50% to 30%. Pandey indicated that this action also reduces average tariffs from 13% to 11%.
"It's essential to convey the right message globally and to our domestic industry," Pandey stated. "These tariff measures are designed to support domestic companies initially but will be gradually phased out as industries mature."