Domestic manufacturing of industrial goods in sectors such as automobiles and auto components, shipbuilding, basic metals, and others may be impacted by the reduction or removal of import duties on industrial products imported from the US, experts said.
“The industrial products in these sectors (auto, shipbuilding) currently have the highest MFN rates and are thrust sectors in India’s manufacturing, which may face high competition from goods imported from the US,” said Bipin Sapra, partner and indirect tax policy leader at EY India.
According to the India–US trade deal, India will eliminate or reduce tariffs on all US industrial goods and a wide range of American food and agricultural products.
What did Sanjay Budhia say?
“Import-competing segments may face heightened competitive pressure in the short term, especially where domestic scale, technology depth or standards are still evolving,” said Sanjay Budhia, chairman, CII National Committee on Exports and Imports.
He added that, at the same time, cheaper access to high-quality inputs, capital goods and advanced technologies can lower production costs and raise productivity for downstream industries.
Over the medium term, the net impact will depend on how quickly Indian firms upgrade capabilities, invest in R&D and integrate into global value chains, including deeper linkages with the US, Budhia said.
Sapra of EY agreed with Budhia. For final products that compete with American goods, Indian companies will have to become more competitive by reducing manufacturing costs, while the government will need to frame policies that help the industry strengthen its competitiveness, he said.
Usually, raw materials and capital equipment in sectors such as energy and mining, heavy engineering, electrical and electronics manufacturing, medical devices, plastics and petrochemicals, and organic chemicals are imported in large quantities from the US, he added. Hence, these sectors are likely to gain from reduced costs of industrial inputs following duty cuts, Sapra said.
What do other market participants say?
India’s move to reduce or eliminate duties on US industrial goods will also lower capital costs for advanced equipment and critical materials, benefiting sectors such as chemicals, plastics, rubber and industrial materials, said Anurag Choudhary, CMD and CEO, Himadri Speciality Chemical.
“For us, these shifts help accelerate market expansion and rapidly scale our innovation curve. Lowered input costs further strengthen our speciality chemicals and battery-materials capabilities, amplifying R&D and integration efforts,” Choudhary said.
DV Manjunatha, chairman and managing director, Emmvee Photovoltaic Power, said: “Duty rationalisation will help industries modernise faster and reduce production costs, but it must be calibrated to protect emerging domestic manufacturing ecosystems.”