US President Donald Trump’s reference to India as a “very-high tariff nation” and his demand for a “reciprocal tax” on goods from India is in keeping with Washington’s concerted attacks on India’s trade stance. In his address to the Conservative Political Action Conference in Washington DC on Saturday,
Trump went back to his often-cited example of the Harley-Davidson motorcycles to substantiate his point about India, which came at a time when the US and China have managed a temporary truce over tariffs.
India’s tariffs used to be high till about the late 1990s, with the peak customs duty — the highest of the normal rates — on non-agriculture products steadily coming down steeply from 150 per cent in 1991-92 to 40 per cent in 1997-98 and subsequently, to 20 per cent in 2004-05 and 10 per cent in 2007-08.
According to WTO data, India’s average applied tariff is around 13 per cent and it plans to move toward the ASEAN tariff rates progressively (approximately 5 per cent on average). There has, however, been a move to increase duties on a number of items by the NDA government over the last five years.
According to US, India’s tariff regime is characterised by “pronounced disparities” between bound rates and its most favoured nation applied rates.
The US asserts that India’s average bound tariff rate the customs duty rates committed by a country to all other members) is 48.5 per cent, while its simple MFN average applied tariff is 13.4 per cent.
Washington also argues that India has not systematically reduced the basic customs duty in the past six years and maintains high tariff peaks on several goods, including flowers, natural rubber, automobiles and motorcycles, alcoholic beverages and textiles.