Govt Defends Tariff Policy, Says Balancing Domestic Growth And Global Competition Remains A Challenge

Addressing concerns over recent remarks made by NITI Aayog about lowering tariffs for economic growth, Jitin Prasada said the government aims to maintain a balanced approach to trade regulations.

The government has undertaken substantial tariff reforms to correct inverted duty structures, where raw material import duties exceed those on finished goods, the minister explained.

Source : Freepik

India’s tariff policy is a crucial tool for regulating trade, protecting domestic industries, and generating revenue, Union Minister of State for Commerce, Jitin Prasada, said in the Lok Sabha on Tuesday.

Addressing concerns over recent remarks made by NITI Aayog on the need to lower tariffs for economic growth, Prasada reaffirmed the government’s stance on maintaining a balanced approach to trade regulations.

During the Question Hour, the minister stated that India's broader strategy focuses on sustainable economic expansion while enhancing the country's position in global markets, reported PTI. “India’s tariff policy aims to regulate trade, protect domestic industries, and generate revenue through taxes on imported and exported goods,” he said.

Reforms and Global Trade Commitments

The minister noted that India, as a member of the World Trade Organisation (WTO), adheres to maximum tariff limits for various goods. However, applied tariffs generally remain below these limits, providing flexibility in trade policy.

He highlighted the country's ongoing efforts to streamline tariff structures and facilitate trade, aligning with its international commitments.

Prasada also pointed out India's growing engagement in Preferential and Free Trade Agreements (PTAs/FTAs), which aim to reduce or eliminate tariffs on significant trade volumes. Currently, India is part of 13 FTAs and nine PTAs, with ongoing negotiations involving the European Union, the United States, the United Kingdom, Oman, New Zealand, and Peru.

Striking a Balance Between Industry and Trade

Lowering tariffs on raw materials and intermediate goods can enhance manufacturers' competitiveness, Prasada acknowledged. However, he emphasised the importance of a balanced approach that considers both domestic producers and consumers.

The government has undertaken substantial tariff reforms to correct inverted duty structures, where raw material import duties exceed those on finished goods, the minister explained.

These measures aim to cut production costs, promote local manufacturing, and strengthen India’s global trade standing. Despite these efforts, certain domestic industries continue to push for higher tariffs to safeguard against foreign competition, he noted.

Citing recent policy actions, Prasada highlighted that in March 2025, India removed import duties on 35 items crucial for Electric Vehicle (EV) battery production and 28 items used in mobile phone manufacturing. These changes were aimed at boosting local production and improving export competitiveness. Similarly, lowering import duties on critical minerals is expected to attract investment into the sector, he pointed out.

Prasada said that the challenge remains in 'balancing tariff policies to support both domestic growth and international competitiveness'.