Customs duty cuts, levy withdrawals an ongoing process, not linked to global events: FM Sitharaman

NEW DELHI: Finance Minister Nirmala Sitharaman on Thursday said the ongoing process of rationalizing customs duties and withdrawing the 6 per cent equalization levy, which began in 2023, is independent of any global events and will continue.

Sitharaman said customs duty reductions are part of India’s broader objective to strengthen its manufacturing hub and boost battery and advanced chemistry capacities.

Replying to a debate on the Finance Bill 2025 in Rajya Sabha, Sitharaman said, “Consistently, budget after budget, we are coming up with a reduction in duties so that India’s aspiration for being a manufacturing hub and India’s aspiration in building capacities for battery manufacturing and advanced chemistry is being supported. So, this is a consistent thing.”

“I heard quite a few members say, “Oh, the tariff war has started, so in response to the tariff announcements made by President Trump, here we are doing it. No, we have been doing it since 2023, steadily, every year. Newer items are being brought in, keeping in mind Atmanirbhar Bharat and, at the same time, Viksit Bharat’s requirements, as well as simplifying the customs duty and compliance details,” Sitharaman said.

“So, this is an ongoing process. It has nothing to do with today’s global situation but is a process that will continue even in the future,” she added.

India reduced Customs duties on many items and withdrew the equalisation levy of 6 per cent. In a significant policy announcement from the Oval Office, President Donald Trump has declared a 25 per cent tariff on all imported vehicles entering the United States, a move he described as “very exciting” for domestic manufacturing.

The tariffs, set to take effect on April 2, will impact nearly half of all vehicles sold in the United States, including American brands assembled overseas. The wide-ranging measure aims to incentivise car manufacturers to establish more production facilities within US borders.

Industry experts warn that the tariffs could have far-reaching consequences. Autos Drive America, a representative group for international car manufacturers operating in the US, expressed serious concerns about the potential fallout.

“The tariffs will make car production more expensive,” the group stated, “potentially leading to higher prices for consumers, reduced consumer choices, and potential job market disruptions.”

The announcement threatens to escalate trade tensions with key automotive manufacturing nations, including European countries, Japan, and South Korea. These nations export substantial numbers of vehicles to the United States and may view the tariffs as a direct challenge to their automotive industries.

Economists predict the tariffs could increase vehicle prices by thousands of dollars, adding further strain to consumers already grappling with persistent inflation. The move represents a dramatic intervention in the automotive market, potentially reshaping global car manufacturing strategies.

President Trump remained bullish about the policy, stating, “Anybody who has plants in the United States, it’s going to be good for.”

As the automotive industry and global markets absorb this significant policy change, other manufacturers, including those in India, are bracing for bigger changes.

Earlier, US President Donald Trump targeted India’s auto import tariffs in a speech to Congress, stating, “India charges us auto tariffs higher than 100%,” and vowed that a reciprocal tax would take effect on April 2. He said that the US has been ripped off for decades by nearly every country on earth and vowed not to “let that happen any longer.” (ANI)