Sudhir Kapadia, a tax expert and senior board adviser, emphasised that India has been actively working to correct its inverted duty structure. Recent Budgets, including the last one (February 1, 2025), have initiated reforms aimed at rationalising customs duties.Kapadia highlighted that these reforms will not only benefit Indian industries but also align with US trade interests, making India a more attractive partner.Kapadia further pointed out that the world is moving towards a model of ‘gated globalisation’, where trade agreements and tariffs are becoming increasingly interlinked. Each country, including India and the US, is likely to maintain differential tariff structures with different trading partners. This evolving trade landscape underscores the importance of strategic negotiations between the two nations.
US tariff concerns and India’s responseAnurag Sehgal, Managing Director at Price Waterhouse & Co, noted that US President Donald Trump has repeatedly raised concerns about India’s high tariff rates. The focus has been on sectors such as automobiles and motorcycles, where India has historically imposed higher duties.However, Sehgal acknowledged that India has already taken steps to address these concerns by reducing motorcycle import duties to 30% in the recent Budget.
Also Read | Samir Arora: Reciprocal tariffs won’t hit most Indian industries, market near bottomSehgal further stressed that the main objective of these tariff discussions is to bring India to the negotiating table. He expects the upcoming trade deal to prioritise sectors of mutual interest, particularly those that impact US exports to India and vice versa. While the US is likely to focus on automobiles and agricultural products, India’s primary concerns revolve around pharmaceuticals, diamonds, engineering goods, and auto parts.The broader economic impactKapadia noted that India’s overall customs duty structure is moderate for most items, with higher tariffs generally applied to luxury products. From a macroeconomic perspective, he argued that the impact of tariff reductions in these categories would be limited. Rather, the real opportunity lies in India’s ability to capitalise on trade liberalisation by reducing duties on raw materials and intermediate goods. This approach would not only benefit Indian industries but also enhance competitiveness vis-à-vis China.Also Read | India-US energy ties: Modi-Trump ‘spark’ a new eraKapadia believes that aligning tariff policies with a lower-duty framework could position India as a strong alternative manufacturing hub, strengthening trade relations with the US and other global economies.For the full interview, watch the accompanying videoCatch all the latest updates from the stock market here
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