India’s Tariff Policies Align with WTO Norms, Says Finance Minister Sitharaman

India to Prioritize National Interests in Trade Negotiations with the US

India’s prevailing tariff structure is in compliance with World Trade Organisation (WTO) norms, Finance Minister Nirmala Sitharaman asserted on March 6, responding to criticism from US President Donald Trump regarding India’s high auto tariffs.

Speaking at a press conference in Visakhapatnam, Andhra Pradesh, Sitharaman emphasized that India’s tariffs are designed to protect its developing industries, ensuring a level playing field for domestic manufacturers.

“What prevails today as tariffs are to protect our own industry. Our industry is developing, and tariffs are consistent with WTO norms. We will keep India’s interest in mind during negotiations (with the US),” Sitharaman stated.

The finance minister also reassured stakeholders that India will safeguard exporters’ interests during bilateral trade discussions with the United States.

“The Commerce Minister (Piyush Goyal) has gone to the US to initiate discussions, and all of us are sharing inputs to protect the interests of exporters,” she added.

US Seeks Zero Tariffs on Most Products Except Agriculture

According to CNBC-TV18, the United States has requested India to eliminate tariffs on almost all of its products—excluding agricultural goods. The demand comes amid ongoing trade tensions, with Trump repeatedly criticizing India’s tariff structure.

In his first address to a joint session of Congress, Trump named India as one of the countries imposing high tariffs on US goods, particularly targeting automobile tariffs levied by New Delhi.

“Other countries have used tariffs against us for decades, and now it’s our turn to start using them against those other countries,” Trump declared, underscoring his administration’s reciprocal trade policy.

However, a Moneycontrol analysis revealed that only 0.4 percent of US non-oil exports face tariffs of 60 percent or more worldwide. Furthermore, India ranks ninth among nations imposing such high tariffs on US goods—behind South Korea, Canada, Mexico, China, and others.

India’s Trade Policy Aims to Balance Protection and Global Commitments

While the US has been vocal about India’s auto tariffs, the Indian government maintains that tariff structures are essential for fostering domestic growth. Historically, India has used tariff protection to nurture nascent industries, allowing them to compete globally.

Moreover, India’s customs duty rates have been gradually reduced over the years. In its latest Budget, the government lowered import duties on multiple products, ensuring that only a few select items continue to face high tariffs.

Trade analysts point out that India’s trade policy follows a dual approach—supporting domestic industries while complying with WTO commitments.

“India, as a developing country, has a right to impose protective tariffs under WTO guidelines. However, it has also been actively reducing duties in recent years to align with global trade standards,” said a senior economist at a leading policy think tank.

Taxation Policies: Sitharaman Addresses Key Concerns

During the press conference, Sitharaman also addressed queries on taxation policies, particularly regarding the impact of the increased income tax exemption limit on the number of taxpayers.

She noted that the recent Budget raised the exemption limit to ₹12 lakh, which might result in fewer people paying income tax.

“Currently, around 9 crore people file income tax returns, but only 3 crore actually pay taxes. With the raised exemption threshold, the number of taxpayers may decline,” Sitharaman explained.

Additionally, the event featured Department of Economic Affairs Secretary Ajay Seth, who responded to concerns about long-term capital gains taxation and stock market fluctuations.

“Stock markets go up and down for different reasons, and they have nothing to do with taxation. The Government of India does not take a view on differentiating between different asset classes. We charge them uniformly. Tax rates and stock markets are separate issues,” Seth stated.

Outlook: India Balances Trade & Tax Policies with Economic Growth Goals

As India navigates global trade negotiations, the government remains firm on maintaining WTO-compliant tariff policies that support domestic industries. At the same time, it seeks to balance trade liberalization with economic security, ensuring Indian exporters benefit from fair trade agreements.

On the taxation front, recent reforms aim to simplify tax structures, reduce the burden on middle-income groups, and broaden compliance. However, the impact of these changes on tax collections and economic growth will unfold in the coming months.

With ongoing India-US trade discussions, global economic shifts, and domestic economic reforms, policymakers face the challenge of maintaining stability while driving sustained growth.