India’s Tariff & Customs System Requires Overhaul To Support Manufacturing & Export Growth: GTRI Report

New Delhi, Jan 19 (KNN) India needs a major reform of its import tariffs and customs administration to lower trade costs, enhance manufacturing competitiveness, and boost exports, according to a report by trade think tank Global Trade Research Initiative (GTRI).

Case for Reform

Titled ‘A Blueprint for Modernizing India’s Import Tariffs and Customs Regime’, the report calls for reforms across tariff policy, customs procedures, export incentives, and manpower deployment. 

GTRI argues that these changes would transform customs from a control-oriented system into a growth-enabling institution aligned with India’s manufacturing and supply-chain objectives, reported ANI.

With India’s merchandise trade crossing USD 1.16 trillion and nearly 29 per cent of GDP passing through customs, even small inefficiencies now raise input costs, delay shipments, and reduce export competitiveness.

Rationalising Tariffs

The report highlights that customs duties account for only about 6 per cent of gross tax revenue, averaging 3.9 per cent of import value, and are heavily skewed, with nearly 90 per cent of import value concentrated in less than 10 per cent of tariff lines. 

GTRI argues that maintaining a complex tariff system for limited fiscal returns imposes high administrative and compliance costs.

The report recommends eliminating duties on most industrial raw materials and key intermediates, imposing a low standard duty of around 5 per cent on finished industrial goods over three years, and removing inverted duty structures where inputs are taxed higher than finished products. 

It also calls for rationalising extreme duties, such as the 150 per cent alcohol tariff, which encourage evasion while generating minimal revenue. 

GTRI emphasised that tariff reform should consider total import duties, including cesses, surcharges, and trade remedies, which often push effective rates well above headline tariffs.

Customs Administration and Transparency

The report criticised the complexity of customs notifications, noting that traders often navigate hundreds of overlapping rules without clear references. 

GTRI recommended issuing self-contained notifications and publishing all applicable import duties in a unified online schedule to improve transparency, reduce compliance burdens, and support India’s manufacturing and export growth.

(KNN Bureau)