Tariff Watch: US Flags India's Trade Barriers As 'Opaque', 'Onerous' Ahead Of April 2 Deadline

The United States has flagged several of India's import policies and high-tariffs as key trade barriers, highlighting differences among the two key economies ahead of the April 2 reciprocal tariff deadline.

In its National Trade Estimate report for 2025, the US has listed several foreign trade barriers against key trading partners.

Firstly, the US noted India's average Most-Favored-Nation applied tariff rate was 17%, the highest of any major world economy, with an average applied tariff rate of 13.55% for non-agricultural goods and 39% for agricultural goods.

"High tariff rates also present a significant barrier to trade in other agricultural goods and processed foods (e.g., poultry, potatoes, citrus, almonds, pecans, apples, grapes, canned peaches, chocolate, cookies, frozen french fries, and other prepared foods used in fast-food restaurants)," it said.

It also pointed that India maintains "very high basic customs duties (in some cases exceeding 20%) on drug formulations, including life-saving drugs and finished medicines" listed on the World Health Organization’s list of essential medicines.

It also sharply criticised India's tariff hikes on imported headphones, loudspeakers, and smart meters used by power distribution companies.

"In addition, starting in 2014, India has repeatedly applied tariffs on certain telecommunications equipment, including network switches, that appear to be above its WTO bound commitments to provide duty-free treatment," it said.

The US added that India’s tariff rates are announced and modified on an ad hoc basis, without opportunity for comment. "The tariff rates are subject to numerous exemptions that vary according to the product, user, intended use, or specific export promotion program. This renders India’s customs system complex and open to administrative discretion," it said.

The US noted that India maintains various forms of non-tariff barriers, such as banned or prohibited items that are denied entry into India such as fats of animal origin; items that require a non-automatic import license such as certain livestock or IT products; and items that are importable only by government trading monopolies and are subject to cabinet approval regarding import timing and quantity (such as corn under a tariff-rate quota).

While the Directorate General of Foreign Trade maintains a list of all three categories of prohibited or restricted items on its website, India "often fails to observe other transparency requirements, such as publication in the Gazette of India of the timing and quantity of restrictions and notification to relevant WTO committees," the US said.

The country added that the "opaque and unpredictable nature of India’s application of quantitative restrictions has affected the ability of US exporters to access the market. The United States, along with other trading partners, continues to raise India’s application of quantitative restrictions at the WTO," it said.

Further, US said that its stakeholders have reported that obtaining an import license for remanufactured goods is onerous. "Stakeholders noted excessive details are required in the license application, quantity limitations are set for specific parts, and long delays occur between the submission of an application and the grant of a license."

The United States said it will continue to make use of all available fora with a view to securing the entry of US agricultural products, including dairy products, alfalfa hay, and other feed grains into the Indian market.

It noted that India imposes "onerous requirements" on dairy imports, pointing out culture-based rules that dairy products intended for food cannot be derived from animals that have consumed feeds containing internal organs or blood meal.

"This requirement, along with the recent dairy health certificate requirements, new facility registration requirements, and high tariff rates, continues to hamper market access for US milk and dairy product exports to India, one of the largest dairy markets in the world. The US Government continues to press the Indian Government, including through the TPF, to provide greater access to the Indian dairy market," it said.

The US also took issue of India's public grain stockholding programs, calling it "controversial" because the government procures food grains and other commodities at guaranteed supported prices through MSP programs rather than at market prices.

It cited rice as an example, adding that India’s excessive subsidisation through market-price support has gone far beyond its domestic food security needs and has helped India secure its place as the top global exporter of rice, accounting for more than 40% of global rice exports in recent years.

India’s announcement of minimum support prices for crop can have the effect of providing a subsidy by setting a price floor for India’s farmers, it added.

"The prices are announced before the planting season. Therefore, the MSP bolsters planting decisions, resulting in overproduction, limited demand for imports, and artificial export competitiveness. From 2018 to present, several WTO Members have submitted seven counter notifications against India’s MSP program, covering several of the 25 agricultural products benefiting from it, with a particular focus on sugar, rice, and wheat," it added.