The government is now drawing up a list of products that are very specific to the US as this round of cuts, outside of the proposed trade agreement, will be on most favoured nation (MFN) basis, implying the reduced duty would apply to all MFN imports of those products.
The government wants to make sure that the beneficiary products are made in the US. The list could cover four to five products, including certain kinds of electronics, chemicals and plastics, besides aircraft, parachutes and cruise ships. India levies duties of 7.5-10% on these items.
New Delhi recently cut duties on several products, including bourbon whiskey, scrap and motorcycles.
“Multiple strategies are being examined,” said an official.
Digital Services, Data Localisation Discussed
According to World Trade Organization rules, changes to customs tariffs have to be on MFN basis, unless under a trade agreement with another nation. A country’s trade policies apply equally to all MFN partners.
A final call on the proposed cuts will be taken at the highest levels of the government after taking into account all scenarios and the progress that’s been made on the proposed India-US Bilateral Trade Agreement (BTA), another official said.
Besides tariffs, issues related to digital services and data localisation are also being discussed.
The local industry wants to avert or delay Trump’s tariffs and has written to the government for intervention. Since the February 1 budget, India’s simple average industrial tariff has dropped to 10.66%, from 13.5% in 2023, the government told Parliament. India’s simple average tariff rate is 17%, with the simple average agricultural tariff, which includes textiles, at 39%. In the budget, the Centre lowered import duty on bourbon whiskey to 100%, from 150%, besides announcing cuts on import of fish hydrolysate for the manufacture of aquatic feed, specific waste and scrap items, ground installations for satellites, ethernet switches and motorcycles-moves that will benefit US-made products.
India is also contemplating tariff concessions for certain American farm produce under the proposed BTA, official talks for which began on Wednesday. The issues were also discussed at a meeting of senior government and industry officials last week, at which concerns over the unfairness of some trading partners were raised.
