Revamping India's Tariff Structure: A Blueprint for Export Growth

The Global Trade Research Initiative (GTRI) recommends overhauling India's import tariff structure to reduce trade costs, enhance manufacturing competitiveness, and revive export growth. Key suggestions include zero duty on industrial raw materials and rationalizing extreme tariffs. These reforms aim to simplify the customs regime and support exporters.

In a bid to bolster its manufacturing sector and boost export growth, India is advised to streamline its import tariff structure and customs procedures, according to a new report by the Global Trade Research Initiative (GTRI). The think tank advocates moving towards zero duty on many industrial raw materials and suggests introducing a low standard duty on finished goods over the next three years.

The GTRI report highlights the issue of inverted duty structures, where components are taxed higher than completed products, thereby eroding domestic competitiveness. The report also critiques extreme tariff rates, such as the 150% duty on alcohol, and calls for them to be rationalized due to their negligible fiscal contributions and propensity to encourage evasion.

Furthermore, the report underlines the complexity importers face, including the cumulative burden of various tariffs and trade remedies. To reform this, GTRI suggests that India adopt a more transparent and cohesive approach. This includes publishing all import duties in a unified schedule and ensuring customs rule notifications are self-contained and clear, easing compliance for traders and enhancing global competitiveness.

(With inputs from agencies.)