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Home»Business»Overhaul of import tariff structure, customs processes to cut trade costs, boost manufacturing, exports: GTRI
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Overhaul of import tariff structure, customs processes to cut trade costs, boost manufacturing, exports: GTRI

editorialBy editorialJanuary 17, 2026No Comments3 Mins Read
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Overhaul of import tariff structure, customs processes to cut trade costs, boost manufacturing, exports: GTRI
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India needs a sweeping overhaul of its import tariff structure and customs administration to reduce trade costs, strengthen manufacturing competitiveness and revive export growth, think tank Global Trade Research Initiative (GTRI) said on Saturday (January 17, 2026).

It also recommended movement toward zero duty on most industrial raw materials and key intermediates, while adopting a low standard duty of around 5% on finished industrial goods over the next three years.

The think tank also pitched for eliminating inverted duty structures, where inputs are taxed more heavily than finished products, quietly eroding domestic manufacturing competitiveness.

Extreme tariffs, such as the 150% duty on alcohol, should be rationalised, GTRI said, arguing that such rates encourage evasion while delivering negligible fiscal gain.

Equally important, tariff reform should be based on total import duty, not just headline basic customs duty.

Importers face a cumulative burden of cesses, surcharges and trade remedies, making the effective tariff far more complex than official rate schedules suggest, it said.

A report by GTRI said that India’s merchandise trade has crossed $1.16 trillion, and nearly 29% of gross domestic product flows through customs clearances.

In that context, the report noted that even modest inefficiencies now impose economy-wide costs, raising input prices, delaying shipments and weakening export competitiveness at a time when global companies are reassessing sourcing locations amid geopolitical fragmentation.

“India needs a sweeping overhaul of its import tariff structure and customs administration to cut trade costs, strengthen manufacturing competitiveness and revive export growth,” the report titled – A Blueprint for Modernizing India’s Import Tariffs and Customs Regime – said.

Tariffs are no longer a revenue tool, as customs duties now account for just 6% of gross tax revenue and average only 3.9% of the value of imports, it added.

The distribution of tariff revenue is highly skewed as nearly 90% of import value is concentrated in fewer than 10% of tariff lines or product categories, while the bottom 60% of tariff lines generate under 3% of customs revenue.

“Maintaining a complex tariff schedule for such a limited fiscal return imposes high administrative and compliance costs,” GTRI founder Ajay Srivastava said in the report.

It suggested easing customs rules and processes to help traders comply with the provisions smoothly.

The labyrinthine system of customs notifications, many of which amend decades-old rules and are not self-contained, as traders have to navigate hundreds of overlapping notifications to determine applicable duties, often without clear HS (harmonised system)-code references.

GTRI has urged the government to issue self-contained notifications that clearly state their full impact, and to publish all applicable import duties in a single, unified online schedule.

It also called for greater transparency around the renewal of time-bound duty exemptions, including brief public explanations of why they remain necessary.

To reduce disputes, the report recommended aligning India’s duty drawback system with the standard eight-digit HS codes already used for imports and exports.

At present, exporters use a separate coding system for refunds, increasing errors and delays.

It said that approval norms for inland container depots and freight stations should also be liberalised to support modern, niche supply chains, rather than forcing one-size-fits-all logistics infrastructure, the report argued.

Further, the report said that the customs officers should be redeployed toward audits, origin verification and inland clearance points.

“Customs officers should be posted overseas at Indian embassies and major ports to help exporters resolve non-tariff barriers and learn global best practices,” Mr. Srivastava said in the report.

The report is co-authored by former IRS (Customs) officer Satish Reddy.

Published – January 17, 2026 01:59 pm IST

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