India Cuts Tariffs to Boost Local Manufacturing and Exports Impacted by US Policies

India has announced reductions in tariffs on capital goods and raw materials to reduce reliance on China and lower costs for exporters affected by U.S. trade policies. The move targets critical inputs for energy transition, including capital goods for processing minerals and producing lithium-ion battery cells, as well as sodium antimonate for solar glass and monazite, a rare earth element used in permanent magnets for electric vehicles. China controls over 90% of global processing for these magnets, and last year’s export restrictions had impacted India’s EV production plans.

The tariff cuts also support domestic production in key export-oriented sectors such as marine, leather, and textiles, which have been challenged by U.S. trade measures. Additionally, duties on raw materials for aircraft components used in maintenance and repair for the defense sector, as well as inputs for the electronics industry, have been reduced.

Analysts say these adjustments aim to help Indian firms integrate into global supply chains, attract investment, and achieve the country’s $1 trillion goods export target. The government’s approach signals continuity in trade policy, aligning the tariff regime with evolving global trade agreements while addressing geopolitical tensions and rising protectionism.