Can India Also Raise Tariffs on Other Countries Like the US?

Tariffs have a significant impact on how nations shape their economic policies and diplomatic ties in the dynamic world of international trade. Governments employ tariffs, often known as import charges, to control trade, safeguard home industries, and make money. One topic that frequently comes up in light of rising geopolitical and economic tensions is: Can India raise taxes on imports from other nations, particularly the US? Indeed, as a strategic weapon in trade policy, India has the power to modify tariffs. But there are advantages and disadvantages to such choices.

The Power of India to Increase Tariffs:
India has complete authority over its tariff policy as a sovereign state, and it is permitted to raise import taxes in certain situations. Tariff rates are set by the government through the Directorate General of Foreign Trade (DGFT) and the Ministry of Finance in accordance with international commitments, trade agreements, and economic demands. The World Trade Organization (WTO), of which India is a member, establishes rules regarding tariff increases in order to stop unfair trade practices. India has the freedom to alter duties within the predetermined parameters, even though WTO regulations restrict how much a nation can raise tariffs.

Why India Might Raise Tariffs on the US and Other Countries

1. Retaliatory Actions in Trade Conflicts:

In trade disputes, tariffs are frequently employed as a countermeasure. For instance, India raised levies on 28 US goods, including as apples, walnuts, and almonds, in retaliation for the US’s increased tariffs on Indian steel and aluminum in 2018–19. India has the option to raise import taxes on particular items from the US or any other nation that places additional trade restrictions on Indian exports.

2. Preserving Domestic Industries:

In order to protect domestic industries from overseas competition, India may increase tariffs. Industries like as manufacturing, electronics, cars, and agriculture frequently call for increased import taxes to stop a flood of lower-priced foreign goods that would harm native manufacturing. For example, as part of the “Make in India” campaign, India has progressively raised taxes on Chinese electronics in an effort to encourage domestic production.

3. Improving Local Supply Chains and Reducing Trade Deficit
When a nation imports more goods than it sells, it has a trade imbalance. India may raise tariffs on some imports and promote domestic manufacturing to lessen its reliance on imported items. This strategy supports India’s Aatmanirbhar Bharat, or self-reliance aim.

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