India trade barriers: India’s trade regime is once again under examination. At the country’s eighth Trade Policy Review at the World Trade Organisation in July, the United States and the European Union questioned New Delhi’s tariffs, Quality Control Orders, local-content rules, government procurement policies and restrictions on digital trade.
The criticism cannot be dismissed. India’s ambition to emerge as a manufacturing and export base sits uneasily with costly imports, uncertain approvals and standards that change too often. Yet the argument advanced by Washington and Brussels has an obvious weakness. Both protect domestic industry through tariffs, subsidies or regulation. India should clean up its trade regime because many of these restrictions hurt Indian producers, rather than because its trading partners demand it.
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India’s tariffs tell only part of the story
A WTO Trade Policy Review allows member countries to examine and question the policies of the economy under review. India’s latest exercise covered January 2021 to December 2025. The US and the EU used it to raise concerns about tariffs, sanitary and phytosanitary measures, technical standards, local-content requirements, services and rules governing cross-border data flows.
India does impose higher tariffs than most large trading economies. WTO data show that its simple average most-favoured-nation applied tariff was about 16% in 2025. The trade-weighted average was around half that figure. The gap arises because the simple average gives equal weight to every tariff line, including products imported in negligible quantities, while the trade-weighted measure reflects the duties paid on goods that India imports in volume.
Agriculture remains far more protected than industry. India’s average tariff on agricultural products is close to 39%, against about 13% on non-agricultural goods. Average US duties are much lower. Even so, comparisons between the two countries require care because their tariff schedules, import patterns and product coverage differ.
High duties raise the cost of imported inputs for Indian manufacturers. They can also discourage firms from placing parts of their supply chains in India. A factory expected to compete in export markets cannot afford delays or additional costs on machinery, components and raw materials.
Tariffs, however, are at least visible. An exporter can include the duty in its calculations before entering the Indian market. Regulatory barriers are harder to price. Testing requirements, certification procedures, licensing conditions and customs practices can change the commercial calculation after a company has invested.
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Quality controls must serve consumers
Quality Control Orders illustrate the problem. There is nothing objectionable about requiring imported products to meet safety, health or environmental standards. Indian consumers and workers deserve the same protection as their counterparts in richer economies.
Difficulties arise when Indian standards diverge from widely accepted international norms without a clear technical reason, or when products certified by recognised foreign laboratories must be tested again in India. Short implementation periods can leave importers with goods in transit that no longer meet the prescribed rules. Such measures increase costs for Indian companies that depend on imported inputs as much as they inconvenience foreign suppliers.
The government has begun to acknowledge these costs. A high-level committee constituted by NITI Aayog examined the operation of QCOs, and several orders have since been withdrawn or reconsidered. The US and the EU noted these changes during the WTO review.
The India-EU trade agreement provides a framework for further reform. Its provisions on technical barriers call for greater transparency, consultations before new regulations are introduced and a reasonable interval between publication and enforcement. A joint mechanism on conformity assessment could also reduce duplicative testing.
These disciplines should apply to Indian regulation generally, not only to goods imported from Europe. If an international standard provides adequate protection, a separate domestic requirement needs a reason that can withstand public scrutiny. Where testing in India is indispensable, the government should explain why and ensure sufficient laboratory capacity before enforcing the rule.
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Washington and Brussels protect their own markets
The US case for open Indian markets is weakened by its own trade policy. Washington has used tariffs, national-security restrictions and domestic-production incentives to favour American industry. Steel, aluminium, automobiles and other sectors have received protection when US administrations considered it economically or politically necessary.
American objections to India’s trade restrictions may still be valid. Their validity does not depend on American consistency. But Washington cannot credibly treat protection as an exceptional policy tool at home and evidence of economic misconduct when India uses it.
Europe relies more heavily on regulation. The EU Carbon Border Adjustment Mechanism seeks to impose on certain imports a carbon cost comparable to that borne by European producers under the EU emissions-trading system. Its stated purpose is to prevent carbon leakage, and that objective has a defensible environmental basis.
For exporters in developing economies, however, CBAM brings substantial reporting and verification costs. Access to the European market increasingly depends on a producer’s ability to measure and document emissions through systems designed around European requirements. Large companies may manage this transition. Smaller manufacturers could lose market access even when their production is competitive.
CBAM should therefore be judged on whether it treats imported and European products comparably, recognises carbon prices already paid in the exporting country and gives developing economies adequate time and technical support. Describing every environmental rule as protectionism would be as mistaken as assuming that every such rule is free of protectionist consequences.
Trade barriers: Reform must lower costs inside India
India’s task is to distinguish necessary regulation from measures that shelter domestic producers at the expense of consumers and downstream industry. A QCO required for safety should remain. Domestic testing should be compulsory only where foreign certification cannot provide reliable assurance. Customs decisions must be consistent across ports, and businesses should have time to adjust before new rules take effect.
The same test should apply to digital trade. India has valid reasons to regulate payments, personal data, competition and sensitive technologies. Restrictions should address an identified risk and be proportionate to it. Data localisation or licensing requirements cannot compensate for weak enforcement or poorly drafted governance rules.
The strongest case for reform comes from India’s own economic ambitions. Manufacturers cannot participate efficiently in global supply chains when inputs are expensive, approvals unpredictable and standards needlessly different from those used in export markets. Protection may help a producer facing import competition, but it can hurt several Indian firms that buy that producer’s goods.
India should reject the false choice between indiscriminate liberalisation and permanent protection. Tariffs and regulation sometimes serve legitimate development objectives. Each measure, however, must be tested against its cost to Indian production, exports and consumers. That is a more credible basis for trade policy than either foreign pressure or domestic lobbying.