The US wants India to lower trade barriers, saying this would lower prices to consumers and promote the development of value chains in India. India has increased customs duties on dozens of products to help its flagship Make-in-India drive. The country says major economies, including the US and China, follow protectionist policies.
Under US pressure, which said there were zero duties for Indian bikes sold in the United States, India cut duties on Harley-Davidson motorbikes to 50 per cent from 75 per cent. India imposed a higher import tax on electronics products such as mobile phones and television sets in December, and then on 40 more items in the budget last month. These included goods as varied as sunglasses, juices and auto components.
The move is aimed at giving local industry the chance to grow and is part of a broader plan to lift the share of manufacturing in GDP from around 15 per cent to a quarter and create the tens of thousands of jobs needed for a young workforce. Even before the new round of hikes, India has been seen as one of the most protected major economies. The United States had an average tariff rate of 3.4 per cent on imported goods in 2016 compared with 13.5 per cent for India.