India’s current tariff structure is no longer effective as a revenue tool and instead raises trade costs, potentially hurting the country’s ambition to become a global manufacturing hub, the think tank said in its flagship report.
In its report, GTRI argued that import duties and complex customs procedures have created inefficiencies that weigh on businesses and exporters.
The study highlighted that while tariffs were historically used to protect domestic industry and generate revenue, their continued complexity now adds to input costs for manufacturers and reduces competitiveness in global markets.
The report outlines 23 recommendations aimed at rationalising tariffs and simplifying customs procedures. These include streamlining duty structures, improving transparency, and modernising administrative processes to make customs a facilitator rather than a bottleneck for trade.
GTRI said these reforms are necessary to reduce transaction costs, accelerate clearance times and align India’s trade framework with global best practices.
The think tank also stressed the need for better policy predictability, noting that frequent changes in tariff rates can create uncertainty for businesses planning investments and supply chains.
Global Trade Shifts Add Pressure
The report comes at a time when global trade dynamics are undergoing significant changes due to geopolitical tensions and supply-chain realignments.
According to GTRI, developments such as the U.S.–China trade conflict and disruptions linked to geopolitical crises have pushed multinational firms to diversify sourcing, creating opportunities for countries like India.
However, to capitalise on these shifts, India must compete on factors such as tariff predictability, logistics efficiency and ease of doing business, the report said.
GTRI said that high import duties on intermediate goods raise production costs for Indian manufacturers, making exports less competitive compared to global peers.
Simplifying tariff structures and reducing unnecessary barriers could help domestic industries integrate more effectively into global value chains, boosting both manufacturing output and export growth.
The report also underlined that efficient customs processes are critical for reducing delays, which can otherwise disrupt supply chains and increase costs for exporters.
The findings align with GTRI’s broader research focus on improving India’s trade competitiveness through policy reforms in tariffs, trade agreements and logistics.
The organisation, which provides data-driven insights on trade and development, said India must adopt a more forward-looking approach to trade policy, balancing domestic industry protection with the need to remain globally competitive. (gtri.co.in)
GTRI said a comprehensive reset of India’s tariff and customs framework could play a key role in positioning the country as a reliable manufacturing and export base amid shifting global supply chains.
Without such reforms, it warned, India risks missing out on emerging opportunities as countries compete to attract investment and integrate into global trade networks. |
