India on Sunday cut a range of tariffs on capital goods and raw materials in a push to cut its dependence on China for products essential to the energy transition and to reduce costs for exporters hit by U.S. trade policies.
Customs duty reforms, analysts say, are critical to achieving India’s $1 trillion goods export target, arguing that lower input costs would help firms integrate into global supply chains and attract investment diversifying away from China.
Finance Minister Nirmala Sitharaman said India will cut the duty on capital goods needed to process critical minerals and make lithium-ion battery cells, which will aid the nation’s energy transition efforts and wean it off China.
In the country’s annual budget, Sitharaman also eliminated tariffs on sodium antimonate used for solar glass production and monazite, a source of rare earth elements used in permanent magnets for electric vehicles.
China, which controls over 90% of global processing capacity for the magnets used for cars and other clean energy technology, placed curbs on exports of rare earth magnets last year, hurting EV production plans in India.
Sitharaman made tariff concessions to support local production of marine, leather and textile products, all export-focussed industries challenged by U.S. President Donald Trump’s punitive tariffs on India.
India will also cut duties on raw materials to manufacture parts of aircraft to be used in maintenance and repair in the defence sector and separately on inputs for the electronics industry, Sitharaman announced.
Analysts said the import tariff cuts signal continuity in trade policy, with incremental adjustments to align India’s duty regime with new trade deals amid global uncertainty, geopolitical tensions and rising protectionism.
As the global economic order undergoes profound changes wrought by the Trump administration, Prime Minister Narendra Modi’s government on Sunday made a fresh bet on its manufacturing sector in the annual budget, but its reform plans fell short of expectations.
The budget made a one-time concession for so-called special economic zones that typically manufacture for exports to sell into the Indian market, as such zones have unutilised capacity due to global trade disruptions.
