GST examining steel imports for safeguard duty imposition: CBIC Chairman

The Union Budget 2025-26 announced measures to rationalise tariff structures amid disruptive trade policies of the new US administration.

In an interview with DH’s Gyanendra Keshri, the Central Board of Indirect Taxes and Customs (CBIC) Chairman Sanjay Kumar Agarwal spoke about the impact of the basic custom duty cuts on India’s foreign trade.

He also delved on the discussions related to Goods and Service Tax on petroleum products and the reforms in the indirect tax system. Here are excerpts from the interview:

US President Donald Trump has labeled India a tariff king. What does India need to do to shake off this image?

In the budget, a comprehensive review of custom duty structure has been announced. Seven tariff rates for industrial goods have been removed. Now the average rate of customs duty in India will come down to 10.66 per cent from the earlier 11.66 per cent. Our custom rate is closer to the ASEAN countries now. So this narrative of the tariff king is not correct.

How will the reduction in tariff rates impact the government’s revenue?

It’s more a restructuring exercise. Some tariff rates have been removed and merged with the closer rates. High tariff rates like 150 per cent, 125 per cent and 100 per cent have been eliminated and merged with 70 per cent. Similarly 40 per cent, 35 per cent, 30 per cent and 25 per cent have been brought to 20 per cent.

But the industry should not feel any sudden shock. So we have adjusted cess accordingly. Agriculture infrastructure and development cess (AIDC) has been increased where the rates have been lowered.

We consult stakeholders on AIDC and see how it can be reduced. So the restructuring of rates will not have any significant impact on revenue.

Do you think there is scope to lower the tariff on items imported from the US?

Few items may be at high tariff, but generally items are at very reasonable tariffs. Our major imports are crude, precious and semi-precious stones, nuclear reactors and machinery and electrical machinery. On crude the tariff is Rs 1 per metric ton, LNG at 5 per cent, coal 2.5 per cent, rough diamond nil.

They may be talking about automobiles, especially high-end cars and motorcycles. But the import of cars and motorcycles from the US are negligible. They are talking about imposing higher taxes on items that they import from India. It is hypothetical, but if they impose high tariffs it will definitely pose a challenge to us.

Steel and some other domestic industries are under pressure due to cheap Chinese imports. Is there any plan to impose safeguard duties to protect the domestic industries?

Some investigations have been undertaken by the Directorate General of Trade Remedies (DGTR) for whether there is a case for safeguard duty or anti-dumping duty on imports from certain countries.

The DGTR will send its recommendations to the Department of Revenue. We will examine it and see if there is a case for imposition of safeguard duty or anti-dumping duty.

For steel I know some investigation is being carried out. But whether safeguard or anti-dumping duty will be imposed will depend on the investigation. So far we have not received any report from the DGTR in this regard.

What is the status of GST rate rationalisation?

A Group of Ministers (GoM) is examining all aspects. The report was not ready by the time the last GST council meeting was held in Jaisalmer in December. Maybe, by the next GST council meeting the GoM report will be ready. It will be placed before the GST council for consideration.

What kind of changes are likely in the GST structure?

The GoM is looking into all aspects like how many slabs should be there, what should be the rate on different types of item, what should be done to simplify the rate structure so that litigation can be avoided and how to raise the revenue.

They will be going into all aspects and then accordingly will make the recommendations. We have to also see that revenue is not impacted. When the GST was introduced, states were assured 14 per cent growth year to year.

That was done by way of compensation and is now no more available. So there has to be some way to ensure that collections remain robust.

What is the status of GST on ATF, natural gas and other petroleum products?

ATF was discussed in the last meeting. The council did not agree on this. Natural gas has not been taken before the GST council. For states, taxes on petrol, diesel and natural gas are the key sources of revenue. They are concerned about the revenue loss.