Govt presses on policy to shield local industries amid Trump tariffs threat

Union Minister Jitin Prasada on Tuesday informed the Lok Sabha that India's tariff policy aims to regulate trade, protect local industries, and generate revenue via taxes on imported and exported goods.

His reply in the Parliament comes just a day before US President Donald Trump's proposed reciprocal tariffs come into effect.

Prasada informed the Parliament that the government is aware of the recent statements made by NITI Aayog regarding tariffs and their impact on India's economic growth.

Jitin Prasada, union minister of state for commerce and industry, during the Question Hour said, "The statement is in line with India's broader strategy for achieving economic growth and making India a more attractive player in the global economy."

Further elaborating, Prasada noted that India is a member of the World Trade Organization (WTO) and is bound to its maximum tariffs, which can be applied to any given commodity line. He further added that these applied tariffs are usually below the bound tariff for a given commodity line.

Amid the changing trade scenario, India is moving towards having a preferential or free trade agreement, wherein customs tariffs and non-tariff barriers are slashed or eliminated on substantial trade between PTA/FTA members.

He also noted that the government has started with comprehensive tariff reforms to correct the inverted duty structures. He said, "Such reforms are designed to reduce production costs, encourage domestic manufacturing, and enhance global competitiveness. However, despite reductions, some domestic industries advocate for higher tariffs to protect against foreign competition."

The recent tariff reductions have had a crucial benefit for local manufacturing and international trade competitiveness across sectors, including electronics and Electric Vehicles (EVs)/ mobile phones, wherein in March 2025, India ended import duties on as many as 35 essential items for EV battery production and 28 items for mobile phone manufacturing, the minister noted.

"This move aims to bolster local production and enhance export competitiveness in these sectors. Similarly, import duty reduction on critical minerals is likely to bring in investment in this sector," he said further.