FM Nirmala Sitharaman On Customs Duties: Why India Is Moving Towards Fewer Tariff Slabs

Fi a ce
Mi iste
Ni mala
Sitha ama
said
the
gove me t
pla s
to
complete
customs
ta iff
atio alisatio
by
the
U io
Budget
2027-28,
aimi g
to
educe
the
umbe
of
ta iff
slabs
to
si gle
digits.
The
move
is
pa t
of
b oade
effo ts
to
simplify
I dia& squo;s
customs
st uctu e,
educe
t ade- elated
complexities
a d
imp ove
competitive ess.
I dia
cu e tly
has
a ou d
13
customs
ta iff
slabs,
although
the
gove me t
has
al eady
educed
the
umbe
to
eight,
i cludi g
the
ze o-duty
slab,
th ough
measu es
a ou ced
i
the
FY24
a d
FY26
Budgets.

The
ave age
customs
duty
ate
has
also
decli ed
to
10.66
pe
ce t
f om
11.65
pe
ce t,
acco di g
to
gove me t
estimates.
Howeve ,
complexities
emai
due
to
specific
duties
o
commodities
such
as
fab ics,
mixed
ta iff
st uctu es,
ag icultu e
i f ast uctu e
cess
a d
i ve ted
duty
st uctu es.

I dia
has
bee
g adually
educi g
its
most-favou ed- atio
ta iffs
ac oss
ea ly
12,400
ta iff
li es.
Afte
the
ave age
ta iff
i c eased
f om
13.4
pe
ce t
i
2016
to
17
pe
ce t
i
2023,
it
eased
to
slightly
above
16
pe
ce t
i
2024
a d
is
cu e tly
a ou d
15
pe
ce t.
The
gove me t& squo;s
latest
push
is
aimed
at
c eati g
a
simple
a d
mo e
p edictable
ta iff
egime.

The
FY27
Budget
co ti ued
the
atio alisatio
p ocess
by
educi g
the
impo t
duty
o
pe so al
goods
to
10
pe
ce t
f om
20
pe
ce t.
It
also
emoved
customs
duty
exemptio s
o
17
medici es
used
fo
ca ce
a d
a e
diseases,
while
expo t
i put
est ictio s
we e
aised
to
40
pe
ce t.

Fu the
cha ges
a e
expected
as
the
gove me t
wo ks
towa ds
a
b oade
ove haul
of
the
customs
f amewo k.
F ee
t ade
ag eeme ts
(FTAs)
a e
also
expected
to
i flue ce
I dia& squo;s
effective
impo t
ta iff
levels.
With
the
I dia-Eu opea
U io
t ade
ag eeme t
pote tially
taki g
effect
befo e
the
e d
of
the
yea
a d
a
possible
t ade
ag eeme t
with
the
U.S.,
impo ts
cove ed
u de
p efe e tial
ta iff
a a geme ts
could
accou t
fo
mo e
tha
half
of
total
impo ts.

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Bike-Taxi
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Could
Cha ge
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Delive ies:
2%
Welfa e
Levy,
I su a ce
A d
EVs

Sitha ama ,
speaki g
at
the
CD
Deshmukh
Memo ial
Lectu e
o ga ised
by
the
Natio al
Cou cil
of
Applied
Eco omic
Resea ch,
also
highlighted
I dia& squo;s
lo g-te m
eco omic
t a sfo matio
a d
its
ambitio
to
become
a
developed
atio
by
2047.
Citi g
eco omic
histo ia
A gus
Maddiso ,
she
oted
that
I dia& squo;s
sha e
of
global
GDP
o
a
pu chasi g
powe
pa ity
basis
has
ecove ed
to
a ou d
8.5
pe
ce t
f om
less
tha
3
pe
ce t
i
the
ea ly
1970s.

She
also
poi ted
to
challe ges
faced
afte
I depe de ce,
i cludi g
Pa titio ,
pove ty,
food
secu ity
co ce s
a d
a
limited
i dust ial
base,
while
highlighti g
i stitutio s
such
as
ISRO,
BARC,
BHEL
a d
IITs
as
impo ta t
co t ibuto s
to
eco omic
developme t.
The
Fi a ce
Mi iste
also
st essed
that
gove me t
bo owi g
should
p ima ily
be
di ected
towa ds
c eati g
p oductive
assets
athe
tha
i c easi g
futu e
liabilities.

She
said
the
gove me t
has
ea ly
t ipled
capital
expe ditu e
ove
the
past
five
yea s,
with
public
spe di g
helpi g
e cou age
p ivate
i vestme t
a d
isk-taki g.
She
u ged
state
gove me ts
to
focus
bo owi g
o
asset
c eatio
a d
imp ove
eve ue
ge e atio
to
educe
the
futu e
debt
bu de .

Acco di g
to
the
IMF,
I dia& squo;s
ge e al
gove me t
debt
stood
at
83.4
pe
ce t
of
GDP
i
2026.
F om
a
stock
ma ket
pe spective,
customs
ta iff
atio alisatio
could
be efit
impo t-depe de t
secto s
such
as
elect o ics,
automobiles,
e gi ee i g
a d
e ewable
e e gy
by
lowe i g
i put
costs
a d
suppo ti g
ma gi s.

Expo t-o ie ted
compa ies
could
also
be efit
f om
a
simple
t ade
egime
a d
imp oved
competitive ess.
Howeve ,
busi esses
that
have
histo ically
be efited
f om
high
impo t
p otectio
may
face
g eate
competitio
f om
ove seas
playe s.
I vesto s
a e
likely
to
focus
o
compa ies
with
st o g
cost
adva tages,
global
supply-chai
exposu e
a d
g eate
ability
to
be efit
f om
lowe
impo t
duties.& bsp;

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