India to Review Import Tariffs on 30+ Items Amid US Tariff Tensions
India plans to review import tariffs on over 30 items, including luxury vehicles, solar cells, and chemicals, to potentially increase imports from the United States, a senior finance ministry official has announced.
The move is aimed at reducing average tariffs ahead of Prime Minister Narendra Modi's visit to the US next week. India has already reduced import tariffs to 11% from 13% on several items to mitigate President Donald Trump's tariff actions.
Various government departments, including those overseeing heavy industries and renewable energy, will consult with local industry on reducing the Agriculture Infrastructure Development Cess (AIDC). The AIDC is an alternative import tariff used to raise funds for farm infrastructure.
India has traditionally protected domestic industries through subsidies and high import tariffs. The proposed tariff reductions target 32 items, including luxury cars, solar cells, and semiconductors, which currently face AIDC tariffs between 6.5% and 70%.
India's average import tariffs, including AIDC, remain higher than those of major trading partners like the US, China, and Japan. The government intends to gradually reduce tariffs to protect domestic industries and enhance their competitiveness.
Regarding the US trade imbalance, the official stated that tariffs on goods imported from the US are relatively low. Imports, particularly of crude oil and liquefied natural gas, are likely to increase this year.
India's trade surplus with the US, estimated at $35 billion in 2023/24, has drawn concern from the US. However, India's imports of US crude oil and LNG could rise due to sanctions on Russian oil companies and China's retaliatory tariffs on US energy imports.
India's top 30 import items from the US, such as oil products and diamonds, face low tariffs ranging from 3% on airplanes to 7.5% on petrochemicals, indicating potential areas for increased imports.