Jakarta, INTI - India on Sunday lowered a series of tariffs on capital equipment and raw materials as part of efforts to reduce onChina for key products needed in the energy transition, while also easing cost pressures on exporters affected by US trade measures.
Analysts noted that reforms to customs duties are essential for India to reach its goal of USD 1 trillion in goods exports, as lower input costs would enable companies to better integrate into global supply chains and attract investment seeking alternatives to China.
Finance Minister Nirmala Sitharaman announced that import duties will be reduced on capital goods required for processing critical minerals and manufacturing lithium-ion battery cells, supporting India’s energy transition agenda and decreasing dependence on China.
In the annual budget, Sitharaman also removed tariffs on sodium antimonate used in solar glass manufacturing, as well as on monazite, a mineral source of rare earth elements used in permanent magnets for electric vehicles.
China, which dominates more than 90 percent of global processing capacity for magnets used in automobiles and clean energy technologies, imposed restrictions on rare earth magnet exports last year, disrupting electric vehicle production plans in India.
Sitharaman introduced tariff reductions aimed at strengthening domestic production in export-oriented sectors such as marine products, leather, and textiles, which have been under pressure from the punitive trade measures imposed by US President Donald Trump on India.
India will also lower duties on raw materials used to manufacture aircraft components for maintenance and repair in the defence sector, along with reducing tariffs on inputs required by the electronics industry, Sitharaman said.
Analysts observed that the import duty cuts reflect policy continuity, with gradual adjustments intended to align India’s tariff framework with new trade agreements amid global economic uncertainty, geopolitical tensions, and rising protectionism.
Budget Signals Manufacturing Focus Despite Limited Reforms
As the global economic landscape is being reshaped by policies under the Trump administration, Prime Minister Narendra Modi’s government on Sunday reaffirmed its focus on manufacturing in the annual budget. However, analysts noted that the scope of the proposed reforms did not fully meet market expectations.
The budget also introduced a one-off concession allowing special economic zones, traditionally dedicated to export manufacturing, to sell products in the domestic market, addressing unused capacity caused by disruptions in global trade.
Conclusion
India’s latest tariff adjustments underscore the government’s continued reliance on manufacturing as a cornerstone of economic strategy amid shifting global trade dynamics. While the measures aim to ease cost pressures, attract investment, and support export-oriented industries, analysts suggest that deeper structural reforms may still be needed to fully strengthen India’s competitiveness in an increasingly protectionist global environment.
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