Customs Duty Cuts, Levy Withdrawals Ongoing, Not Tied to Global Events: FM

Recently, India's Finance Minister Nirmala Sitharaman made it clear again that the process of rationalizing customs duties and withdrawing the 6 percent equalization levy initiated in 2023 was independent of any global developments and will move on. These are steps in line with a comprehensive strategy on part of India to promote its manufacturing sector as well as strengthen its battery and advanced chemistry capacities.

Nirmala Sitharaman said, "Consistently, budget after budget, we are coming up with a reduction in duties so that India's aspiration for being a manufacturing hub and India's aspiration in building capacities for battery manufacturing and advanced chemistry is being supported. So, this is a consistent thing".

As part of this initiative, India has reduced customs duties on a range of products and removed the equalization charge. Meanwhile, U.S. President Donald Trump announced a 25 percent tariff on all cars imported into the U.S. as a part of a major policy shift that he called a major step toward domestic manufacturing, which would take effect from April 2. These tariffs will affect nearly half of the vehicles sold in the U.S., including American brands assembled overseas.

The act is to urge an automaker to shift in order to set up a production facility under their own roof. This did not sit well with many groups in the industry like Autos Drive America, which expressed long-term concerns.

It is expected to heighten tensions with some of America's closest automotive trade partners like Japan, South Korea, and most European nations because they will interpret this as a direct attack against their industry.

According to economists, these would mean that vehicle prices rise to thousands of dollars, adding another burden to consumers who are already suffering under inflation. Significant intrusion in the auto market, this could set new rules to define global strategies for manufacturing and supply chains for the coming years.