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GTRI suggests overhaul of import tariff structure, customs administration
Jan-19-2026

In order to reduce trade costs, strengthen manufacturing competitiveness and revive export growth, the think tank GTRI has suggested an overhaul of Indian import tariff structure and customs administration. Further, it has recommended to reduce the import duty on most industrial raw materials and key intermediates to zero, and a low standard duty of around 5% on finished industrial goods over the next three years. It also pitched for eliminating inverted duty structures, where inputs are taxed more heavily than finished products, quietly eroding domestic manufacturing competitiveness. GTRI argued that extreme tariffs should be rationalised, as such high rates encourage evasion while delivering negligible fiscal gain. It added that the importers face a cumulative burden of cesses, surcharges and trade remedies, making the effective tariff far more complex than official rate schedules suggest.

At a time when global companies are reassessing sourcing locations amid geopolitical fragmentation, GTRI has pointed that even modest inefficiencies now impose economy-wide costs, raising input prices, delaying shipments and weakening export competitiveness. Besides, it noted that tariffs are no longer a revenue tool, as customs duties now account for just 6% of gross tax revenue and average only 3.9% of the value of imports. It added that the distribution of tariff revenue is highly skewed and maintaining a complex tariff schedule for limited fiscal return imposes high administrative and compliance costs. It pointed that nearly 90% of import value is concentrated in fewer than 10% of tariff lines or product categories, while the bottom 60% of tariff lines generate under 3% of customs revenue.

To help traders comply with the provisions smoothly, the GTRI has suggested easing customs rules and processes. The labyrinthine system of customs notifications, many of which amend decades-old rules and are not self-contained, as traders have to navigate hundreds of overlapping notifications to determine applicable duties, often without clear HS (harmonised system)-code references. It has urged the government to issue self-contained notifications that clearly state their full impact, and to publish all applicable import duties in a single, unified online schedule. It also called for greater transparency around the renewal of time-bound duty exemptions, including brief public explanations of why they remain necessary. Further, it recommended that the customs officers should be redeployed toward audits, origin verification and inland clearance points to help exporters resolve non-tariff barriers and learn global best practices.
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