India's Triff Policy Aims To Regulate Trade, Protect Domestic Industries: Govt

India's tariff policy aims to regulate trade, protect domestic industries and generate revenue through taxes on imported and exported goods, Union Minister Jitin Prasada said in the Lok Sabha on Tuesday. Prasada, union minister of state for commerce and industry, said the government is aware of the recent statements made by NITI Aayog regarding tariffs and their impact on India's economic growth.

"The statement is in line with India's broader strategy for achieving economic growth and making India a more attractive player in the global economy," he said during the Question Hour. The minister was asked whether the government is aware of the recent statement of NITI Aayog that tariff protections do not benefit India and reducing tariffs is necessary for economic growth. Prasada said India's tariff policy aims to regulate trade, protect domestic industries, and generate revenue through taxes on imported and exported goods. "Recent reforms have focused on streamlining the tariff structure and facilitating trade," he said.

The minister said India is a member of the WTO and bound to its maximum tariff that can be applied to a given commodity line. The applied tariffs are generally below the bound tariff for a given commodity line. He said with the changing trade scenario, India is moving towards having Preferential/Free Trade Agreements wherein customs tariffs and non-tariff barriers are reduced or eliminated on substantial trade between the PTA/FTA members.

At present, India is a member of 13 FTAs and nine PTAs apart from the negotiations with European Union, United States of America, United Kingdom, Oman, New Zealand and Peru. While lowering tariffs, especially on inputs and intermediate goods, helps in letting manufacturers become more competitive, a calibrated approach is taken while deciding on tariff measures by balancing the domestic producers' and consumers' interest.

The minister said the government has initiated comprehensive tariff reforms to correct inverted duty structures, i.e., situations where import duties on raw materials exceed those on finished products. Such reforms are designed to reduce production costs, encourage domestic manufacturing, and enhance global competitiveness. However, despite reductions, some domestic industries advocate for higher tariffs to protect against foreign competition, he said. Prasada said this highlights the ongoing challenge of balancing tariff policies to support both domestic growth and international competitiveness.

"India's recent tariff reductions have had significant benefit for domestic manufacturing and international trade competitiveness across various sectors such as electronics and Electric Vehicles (EVs)/Mobile Phones wherein in March 2025, India eliminated import duties on 35 items essential for EV battery production and 28 items for mobile phone manufacturing. "This move aims to bolster local production and enhance export competitiveness in these sectors. Similarly, import duty reduction on critical minerals is likely to bring in investment in this sector," he said.

(PTI)