Overview of India’s Import Tariffs
- India’s average import tariff in 2023: 17%, five times higher than the U.S. (3.3%).
- Highest among BRICS nations:
- India: 17%
- Brazil: 11%
- South Africa & China: 7%+
- Russia: 6.6%
- European Union: 5%
Relevance :GS 2(international Relations ), GS 3(Economy)
Agricultural vs. Non-Agricultural Tariffs
- Agricultural tariffs: Over 38% (2018–2023), except 2020.
- Non-agricultural tariffs: Consistently below 15% during the same period.
- High agricultural tariffs aim to:
- Protect domestic farmers and food security.
- Safeguard rural livelihoods (agriculture employs a significant population).
- Counterbalance low agricultural investment (only 6% of total national investment).
Global Context and Protectionism Justification
- India’s stance: High tariffs compensate for global agricultural subsidies (notably U.S. subsidies).
- Challenge: Reducing tariffs may expose Indian farmers to subsidized imports, harming local markets.
- Competitiveness issue: Indian agriculture remains inefficient by global standards.
Sector-wise Tariff Trends (2018–2023)
- High tariffs (>30%): Agriculture, dairy, beverages, and tobacco.
- Reduced tariffs: Transport equipment, cotton, textiles.
- Increased tariffs: Electrical machinery, leather/footwear, some manufactured goods.
India-U.S. Trade Dynamics and Pressures
- U.S. stance: Advocates for reciprocal tariffs to counter perceived unfairness.
- India’s response: Recently reduced bourbon whiskey tariff from 150% to 100%.
- India’s trade surplus with the U.S.:
- Exports crossed $53 billion (FY25, April–November).
- 18% of India’s total exports now go to the U.S. (up from 15% a decade ago).
Implications for Bilateral Trade Negotiations
- Pressure on India: U.S. may push for agricultural tariff reductions during negotiations.
- India’s position: Agricultural tariffs, especially on cereals, remain non-negotiable in FTAs.
- Potential outcome: India-U.S. bilateral talks may prioritize agricultural market access for the U.S.
Way Forward and Policy Considerations
- Enhancing agricultural competitiveness:
- Increase investment beyond the current 6%.
- Promote modern farming techniques and infrastructure.
- Balancing protectionism with global trade commitments:
- Safeguard farmer interests while avoiding WTO disputes.
- Diplomatic maneuvering:
- Strategically negotiate non-agricultural concessions to protect core sectors.
