A report by the Global Trade Research Initiative (GTRI) calls on India to modernise its customs duty structure and economic policies to enhance competitiveness and reduce reliance on imports.
The current system, unchanged for over 20 years, is complex and generates most revenue from a small number of highly taxed goods. GTRI suggests reducing the average import tariff from 18.1% to under 10%, improving trade relations and addressing concerns about high tariffs.
The report also recommends significantly raising the threshold for mandatory Goods and Services Tax (GST) registration, from ₹40 lakh to ₹1.5 crore. This would significantly benefit India’s Micro, Small, and Medium Enterprises (MSMEs) by lowering their tax compliance burden and boosting job creation. Additionally, simplifying the Production Linked Incentive (PLI) scheme’s criteria could encourage greater participation from manufacturers.
The report emphasises the need to review existing Free Trade Agreements (FTAs) and ongoing negotiations to better align with India’s economic goals. The high dependence on Chinese imports, especially in pharmaceuticals and electric vehicles (EVs), raises national security concerns. The report suggests prioritising domestic production of pharmaceutical ingredients and EV components to reduce reliance on China.
Overall, the GTRI report highlights the need for a comprehensive policy overhaul to promote sustainable economic growth, strengthen domestic industries, and lessen India’s vulnerability to external dependencies.
