An Indian parliamentary committee has advised the government to reduce tariffs on imported raw materials to support local manufacturers, particularly as they face increased pressure in upcoming trade negotiations with the United States. The panel, which was established to review trade and commerce legislation, suggested that tariffs on raw materials should be lowered to match the reduced duties currently applied to imported finished goods. This move would help Indian manufacturers remain competitive in both domestic and international markets.

India is preparing to begin trade negotiations with the administration of U.S. President Donald Trump, who has been advocating for significantly lower tariffs on American goods entering India. In addition to these talks, India is working toward finalizing trade agreements with the European Union and New Zealand this year while also accelerating negotiations with Britain. While the committee’s report did not explicitly mention the upcoming U.S. trade discussions, it emphasized the importance of ensuring a level playing field for domestic manufacturers. The panel recommended that tariff reductions on raw materials should align with lower import duties on finished goods to address the issue of unfair competition.

The recommendation aims to correct what is known as an inverted duty structure, where tariffs on imported raw materials and intermediate goods are higher than those on finished products. This imbalance can discourage local manufacturing by making it more cost-effective to import finished goods rather than produce them domestically. Additionally, the committee called for a thorough review of all existing free trade agreements to identify instances where tariffs on raw materials exceed those on final products. Such a review would help policymakers rectify disparities and create a more favorable environment for Indian manufacturers.

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