Key Changes Announced to Customs Tariffs 

• Reduced the total number of custom tariff rates to 8 including the zero rates from 15 earlier.
• Proposed to levy not more than one cess or surcharge. Therefore, exempted Social Welfare Surcharge on 82 tariff lines that are subject to a cess. 
• Apply appropriate cess to broadly maintain effective duty incidence except on a few items. 

Significance

• Amidst the ongoing tariff/trade war, steps to streamline its tariff structure underscore India’s dual approach of protecting domestic industries while facilitating crucial imports.
  • Recently, the U.S. President has ignited a trade war by imposing sweeping tariffs on China, leading to retaliatory measures.
• The tariff rationalization will also help India change the image that India is a very high-tariff country, hurting American firms as accused by US.

What is a Trade war?

• Trade wars are economic conflicts involving tariffs or trade barriers that can disrupt global supply chains, raise costs, and slow economic growth.

How India is Protecting Its Economy from Trade War Impact? 

• Strengthening Domestic Manufacturing: Production-Linked Incentive (PLI) Scheme, Make in India, etc.
• Diversifying Trade Partners: Trade agreements with UAE, Australia, and EU
• Other: Reducing Dependence on China (China+1 strategy), internationalization of the Rupee, etc.