Duty cuts part of continuous process, and not linked to US tariffs: FM

The recent reduction in basic customs duty by the government is part of a continuous process aimed at improving self-reliance and for the country’s development, and not a reaction to the reciprocal tariffs the US plans to impose starting next month, finance minister Nirmala Sitharaman said.

Speaking in the Rajya Sabha, the Upper House of Parliament, in response to a discussion on the Finance Bill, 2025, Sitharaman said the changes in India’s tariffs seek to help the country realize its aspirations in the manufacturing sector.

She said the government’s attempt at duty rationalization has continued for two consecutive years to strengthen manufacturing and boost battery and advanced chemistry capacities.

“So in fiscal budget 2025, the government aims to boost domestic production and enhance export competitiveness by reducing duties on raw materials and inputs, making domestic products more cost-effective,” she told Rajya Sabha.

Seeking to allay the concerns raised by opposition members of Parliament during the discussion, she said, “Duty rationalization will support manufacturing units, ensure domestic value addition, promote exports, facilitate trade, and provide relief to the common people. ”

While refuting former finance minister and senior Congress leader P. Chidambaram’s claim that India’s recent customs duty cuts were influenced by “The Trump Effect,” Sitharaman maintained that the tariff structure announced in the July 2024 budget is being carried forward.

The finance bill proposes to remove seven customs tariff rates on industrial goods in two tranches. The number of customs tariff rates has been slashed from 21 to 8, including to make Indian exporters cost-competitive, she said.

Speaking in Rajya Sabha, Chidambaram had questioned the Modi government’s stance on US President Donald Trump’s tariff war threats.

He said customs duty on motor vehicles such as passenger cars, goods transport vehicles, motorcycles, bicycles, and toys, have been reduced, and was “tucked away in an annexure.”

Chidambaram said the government has reduced duty on passenger cars to 70% from 125%, and on motorcycles to 70% from 100%.

Questioning the government’s motive behind the move, Chidambaram asked “if this was a genuine change of heart or a policy change,” while urging the government to align with “saner voices” like Canada, the UK, Germany, and France in opposing trade wars to safeguard economic stability.

Chidambaram said the government did not discuss tariff cuts with the opposition parties.

“The government is holding its cards (on tariffs) close to its chest,” he said, while wondering “if the government has any cards at all.”

He also praised new Canadian Prime Minister Mark Carney for his “openness” and claimed that Carney’s approach to tariffs was a “mark of democratic transparency.”

Carney said on Thursday that the era of deep economic and security ties with the US “is over,” as global backlash mounted against Trump’s new tariffs on car imports.

Governments from Europe to Asia have hit out against the sweeping tariffs, with some nations warning of potential retaliatory measures.

Carney told reporters that Trump’s actions had permanently changed relations between Canada and the US.

“The old relationship we had with the US based on deepening integration of our economies and tight security and military cooperation is over,” he said, adding that future trade deals would not return things to the way they were.