US report flags high import duties, non-tariff barriers in India

New Delhi: The US has reiterated that India maintains "high" import duties on a range of goods, including agricultural products, pharmaceuticals and alcoholic beverages, along with various non-tariff barriers.

India has always maintained that its duties are in compliance with the rules of the World Trade Organisation (WTO).

According to the US Trade Representative's 2026 National Trade Estimate (NTE) Report on foreign trade barriers, released on March 31, given the large disparity between WTO bound and applied rates, India has considerable flexibility to change tariff rates for both agricultural and non-agricultural products at any time, creating tremendous uncertainty for US workers, farmers, ranchers, and exporters.

It is an annual report that lists key policies and practices of countries that affect US exports, investments, and digital trade. In 2025 also, the report has alleged that import tariffs in India are high.

The report has highlighted several trade and regulatory challenges between the US and India, including issues related to tariffs, non-tariff barriers, intellectual property, services, digital trade, and transparency.

According to trade experts, most of the issues are repeats of earlier reports, and a few have been resolved already.

"India maintains high applied tariffs on a wide range of goods, including vegetable oils (as high as 45 per cent); apples, corn, and motorcycles (50 per cent); automobiles and flowers (60 per cent); natural rubber (70 per cent); coffee, raisins, and walnuts (100 per cent); and alcoholic beverages (150 per cent)," the report has said.

In addition, it said, India maintains "very high" basic customs duties on drug formulations, including life-saving drugs and finished medicines listed on the World Health Organisation's list of essential medicines.

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

India's World Trade Organisation (WTO) bound tariff rates on agricultural products are among the "highest" in the world, averaging 113.1 per cent and ranging as high as 300 per cent. India routinely changes the surcharge on a range of agricultural products, it said.

The report, however, stated that in its 2026 budget, India has reduced applied tariffs on a range of products across multiple sectors, including lifesaving medicines, raw materials and components for electric vehicle and mobile phone battery manufacturing, critical minerals such as lithium-ion battery scrap, cobalt powder, lead and zinc, certain electronic components, mobile phone parts and other industrial inputs.

On non-tariff barriers, it said India has imposed import bans, restrictions, licensing requirements on certain goods, mandatory Quality Control Orders (QCOs), customs barriers, price control on medical devices, and mandatory domestic testing and certification requirements for equipment.

"..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.

It added that to impose import licenses, India distinguishes between goods that are new and those that are secondhand, remanufactured, refurbished, or reconditioned.

"US stakeholders have reported that obtaining an import license for remanufactured goods is onerous. US 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 granting of a license," it said.

The report also alleged that India's tariff rates are announced with the annual budget and are modified on an ad hoc basis through notifications in the Gazette without the opportunity for public 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 both complex and open to administrative discretion," it said, adding that US companies have reported being subject to extensive inspections and seizures of imports that do not appear to be risk-based.

On QCOs, it said these orders target raw materials and intermediate goods in addition to finished products, which can disrupt supply chains.

"The United States has concerns that BIS (Bureau of Indian Standards) standards are not fully aligned with international standards, and India has not demonstrated that international standards would be ineffective or inappropriate; often do not provide a means of establishing conformity or include significantly burdensome requirements; and lack clear timelines for transition periods and license validity," the report said.

Despite certain positive developments at the QCO front, burdensome and trade-restrictive QCOs still remain in effect for key US exports, including medical devices, chemicals, electronics, cosmetic ingredients, and agriculture.

It added that India lacks an overarching government procurement policy, and, as a result, its government procurement practices and procedures vary among different ministries within the central government.

Like last year, the report has flagged concerns on India's intellectual property policies and services sector.

"Foreign investment in businesses in certain major services sectors, including financial services and retail, is subject to limitations on foreign equity, and foreign participation in professional services is significantly restricted," it said.

In addition, barriers to digital trade and electronic commerce, such as those imposed on electronic payment providers, have secondary effects on a wide variety of services, it added.

On the internet segment, it said India has conducted a number of localised shutdowns of the Internet in recent years, and these shutdowns restrict access to information and services, disrupting commercial operations, and thereby undermining a free and open Internet and impeding trade in the digital economy.

"The United States continues to monitor the impact of these events on US trade and investment, including services exports," it added.