NEW DELHI (Reuters) – An Indian parliamentary committee recommended on Friday the government cut tariffs on imports of raw materials in a bid to support local manufacturers, who are expected to come under more pressure in looming trade talks with Washington.
The committee, set up to examine trade and commerce legislation, said tariffs on incoming raw materials should come down to the lower level currently imposed on imported finished goods, to help local makers compete.
India is preparing to kick off negotiations on a trade pact with the administration of U.S. President Donald Trump, who has been pushing for significantly lower duties on U.S. goods coming into India.
India is also planning to seal trade pacts with the European Union and New Zealand this year, and has expedited talks with Britain over a trade deal.
The report released by the committee did not mention the upcoming U.S. trade talks but said it wanted to ensure “a level playing field for domestic manufacturers”.
“The committee recommends implementing matching tariff reductions that adjusts tariffs on raw materials in response to lower import duties on finished goods,” it said.
The panel recommendation seeks to correct so-called inverted duty structures or instances where tariffs on imports of raw materials and intermediate goods are higher than duties on incoming finished products, effectively encouraging imports over local production.
The committee also asked for a comprehensive review of all existing free trade agreements to identify sectors where tariffs on raw materials are higher than on final finished goods.
India’s complicated tariff structure is often cited as a deterrent for efficient local production and a cause of disputes.
(Reporting by Shivangi Acharya, writing by Hritam Mukherjee; Editing by Andrew Heavens)
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