GTRI Proposes Key Reforms to Boost India’s Trade and Manufacturing in Budget 2025-26

The Global Trade Research Initiative (GTRI) has outlined six key proposals aimed at enhancing India’s trade and manufacturing sector in the upcoming Budget 2025-26. The suggestions include reducing import tariffs to approximately 10 percent to encourage domestic production while avoiding global criticism, as well as supporting value-added manufacturing.

Though claims by US President-elect Donald Trump, calling India a “tariff king,” may be overstated, GTRI advocates for a strategic review of import duties to foster low-cost, high-value manufacturing and global trade. Customs duties, contributing only 6.4 percent to gross tax revenue, are seen as less significant in the current landscape, with corporate tax, income tax, and GST forming larger portions of revenue.

The GTRI’s note, written by Ajay Srivastava and Satish Reddy, emphasizes that customs duties no longer serve as a key revenue pillar and calls for a reassessment of tariffs to support domestic manufacturing and improve international trade relations.

The recommendations also include using GST analytics to resolve tax discrepancies early, eliminating exemptions under the MOOWR scheme to benefit local manufacturers, and improving trade logistics through reforms in Customs Cargo Service Providers (CCSPs). Further, the GTRI calls for swift implementation of Budget 2024-2025 initiatives like e-commerce export hubs and the creation of job-linked schemes to drive exports.

Finance Minister Nirmala Sitharaman will present the Budget on February 1, 2025.