February 10, 2025
The Indian government recently announced tariff adjustments on 32 categories of imported goods, including reducing the basic tax rate and introducing an additional tax called AIDC. The highest basic tariff was reduced from 150% to 70%, and the average tax rate was reduced from 13% to below 11%. After the adjustment, although the basic tax of some goods was reduced, additional taxes were required:
1. Luxury cars (CIF value over US$40,000): the basic tax was reduced from 150% to 70%, and an additional 40% AIDC was levied.
2. Transport vehicles/used cars: the basic tax was reduced from 40% to 20%, and the additional taxes were 20% and 67.5% respectively.
3. Solar cells and components: the basic tax was reduced to 20%, and the additional tax was 7.5%-20%.
4. Laboratory chemicals: the basic tax was reduced to 70%, and a 70% AIDC was levied simultaneously.
5. Marble/granite: the basic tax was reduced to 20%, and an additional 20% tax was levied.
6. Yachts/sports boats: an additional tax of 7.5% was levied.
7. Shoes/bicycles: face additional taxes of 18.5% and 15% respectively.
8. Household goods/smart meters, etc.: additional taxes of 5%-20%.
This move is aimed at responding to potential tariff pressure from the United States, promoting trade by reducing the cost of goods imported from the United States, and avoiding retaliatory tariffs from the United States. For example, India previously imposed a 100% tariff on imported cars above $40,000. After the adjustment, the basic tax dropped significantly, but the tax burden was balanced through AIDC, which not only eased trade frictions but also protected local industries.
