Revamping India's Customs Duties: A Call for Simplicity and Growth

The Global Trade Research Initiative (GTRI) urges simplifying India's customs duty structure from over 40 slabs to 5, promoting economic growth by reducing import reliance and fostering manufacturing and exports. The report recommends a lower average tariff and restructuring exemptions to support local industries and reduce operational costs.

The Global Trade Research Initiative (GTRI) has urged the Indian government to revamp its customs duty structure by reducing slabs from over 40 to just five. The think tank argues that lowering tariffs on raw materials compared to finished goods can significantly cut import bills, boost local manufacturing, and enhance exports.

In its report, GTRI suggests an inter-ministerial review of tariff policies to align with national goals and avoid international scrutiny. With 85% of tariff revenue coming from only 10% of tariff lines, refining the framework can optimize revenues without substantial loss.

Highlighting the declining relevance of customs duties as a key revenue source, GTRI advocates for a strategic overhaul. Recommendations include abolishing specific exemptions to support domestic capital goods manufacturers and reforming the regulatory framework of Customs Cargo Service Providers to reduce trade expenses.