India Tariff King Claim Misleading: Trade-Weighted Tariff Only 4.6%, Shows Data
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Trump's "Tariff King" Jibe vs Reality: India's Trade Barriers Lower Than Perceived
New Delhi, August 5: Former US President Donald Trump’s label of India as the "tariff king" has long stirred debate in trade circles. But a closer look at World Bank and official Indian trade data reveals that this claim does not stand up to scrutiny.
While India’s simple average tariff rate is around 15.98%, the more accurate trade-weighted average tariff — which reflects actual duties levied on real-world imports — is just 4.6%, significantly lower than popular perception.
What Is a Trade-Weighted Average Tariff?
Unlike the simple average, the trade-weighted tariff factors in import volume, offering a more realistic view of a country’s tariff burden.
In India's case, the higher tariffs are often restricted to low-volume sectors like agriculture or automobiles, which don’t dominate import baskets.
By contrast, most high-volume US exports to India — such as pharmaceuticals, LNG, industrial machinery, chemicals, and medical equipment — face much lower duties, typically between 2.5% and 8%, according to Indian customs and Ministry of Commerce data.
Breakdown: Tariffs on Key US Exports to India
In FY 2023–24, India imported over $42.2 billion worth of goods from the United States. Nearly 75% of this trade was concentrated in 100 core product categories — the majority of which attract minimal to moderate tariffs:
| Product | Tariff Rate | % of US Exports to India |
|---|---|---|
| Crude Oil & LNG | ₹1.1/tonne & 2.75% | 18.25% |
| Industrial Machinery | 7.5% | 9.75% |
| Coal | 5% | 8.8% |
| Medical Equipment | 5–7.5% | 4.6% |
| Aircraft & Parts | 2.5% | 3% |
| Fertilisers | 7.5–10% | 1% |
India's Free Trade Channels Reduce Tariff Burden
A substantial share of Indian imports enter the country duty-free under schemes like:
- Special Economic Zones (SEZs)
- Export-Oriented Units (EOUs)
- Free Trade Agreements (FTAs)
These frameworks allow for zero or minimal customs duties, further diluting the actual tariff experience faced by exporters.
How Does India Compare Globally?
India’s 4.6% trade-weighted average tariff is:
- Lower than Vietnam (5.1%)
- Lower than Indonesia (5.7%)
- Almost equal to the European Union (5%)
This reflects India’s openness compared to both developing and developed economies.
In contrast, the United States itself applies extremely high tariffs on critical imports like dairy, textiles, agricultural goods, and automobiles, with some exceeding 100%, driven by domestic protectionist policies.
From 80% to 15%: India's Tariff Reform Journey
India has undergone massive trade liberalization since 1991. In 1990, India’s average tariff was 80.9%, but through economic reforms and global integration:
- It dropped to 33% by 1999
- Fell further to 15.98% by 2023
- And sits at a trade-weighted 4.6% today
These numbers reflect policy maturity and global alignment, not a protectionist stance.
Final Thoughts of The Trending People
Donald Trump’s “tariff king” remark may resonate on campaign trails, but facts tell a different story. India’s tariff regime — especially when measured through real trade-weighted averages — is neither extreme nor unfair.
With a moderate tariff structure, multiple duty-free channels, and active trade reforms, India today stands as a competitive and open economy, not a protectionist outlier.
As global trade narratives heat up again ahead of elections and new trade deals, data-driven clarity is more vital than ever — and in India's case, the numbers clearly speak louder than political rhetoric.