1 minEconomic Concept
Economic Concept

Import Duties

What is Import Duties?

Import duties are taxes levied on goods imported into a country. They are also known as tariffs. These duties increase the cost of imported goods, making them relatively more expensive compared to domestically produced goods.

Historical Background

Import duties have been used for centuries as a tool for revenue generation and protection of domestic industries. India has historically had high import duties, which have been gradually reduced as part of economic liberalization.

Key Points

8 points
  • 1.

    Types of import duties include basic customs duty (BCD), integrated goods and services tax (IGST), and compensation cess

  • 2.

    Duties are levied as a percentage of the value of the imported goods (ad valorem) or as a specific amount per unit (specific duty)

  • 3.

    Import duties can be used to protect domestic industries from foreign competition

  • 4.

    They can also be used to generate revenue for the government

  • 5.

    High import duties can lead to higher prices for consumers

  • 6.

    They can also lead to retaliatory measures from other countries

  • 7.

    India's import duty structure is governed by the Customs Act, 1962 and related regulations

  • 8.

    The Ministry of Finance is responsible for setting import duty rates

Visual Insights

Evolution of Import Duties in India

Shows the historical trend of import duties in India, from high protectionism to liberalization.

India's import duty policy has evolved from protectionism to liberalization, influenced by economic reforms and international trade agreements.

  • 1950s-1960sHigh import duties (exceeding 100%) to protect nascent industries.
  • 1991Economic liberalization initiated by the Narasimha Rao government, leading to gradual reduction in import duties.
  • 2023Basic Customs Duty (BCD) imposed on certain electronic components to boost domestic manufacturing.
  • 2024Review of import duties on various agricultural products to balance interests of farmers and consumers.
  • 2025India and the UK continue negotiations on a Free Trade Agreement (FTA), focusing on reducing tariffs.
  • January 2026India and the U.S. announce a trade deal framework including reduced tariffs on certain agricultural products.
  • February 2026Concerns raised by apple traders in J&K regarding reduced import duties on apples from the U.S. and EU.

Recent Developments

5 developments
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Government has been rationalizing import duties to promote manufacturing and exports

→

Import duties on certain raw materials and components have been reduced to lower input costs for domestic industries

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Increased focus on combating customs duty evasion

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Use of import duties as a tool to promote 'Atmanirbhar Bharat' and reduce import dependence

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Recent changes in import duties on electronics, steel, and other key sectors

This Concept in News

1 topics

J&K Apple Traders Concerned Over India-U.S. Trade Deals

23 Feb 2026

This news highlights the protective aspect of import duties. The J&K apple growers are worried because reduced duties challenge the protection they previously enjoyed. The news demonstrates how import duties can directly impact specific sectors and livelihoods. The potential influx of cheaper apples could force local growers to lower prices, reducing their profits and potentially leading to job losses. This situation also reveals the limitations of import duties as a long-term solution. While they can provide temporary protection, they may not address underlying issues such as lower productivity or lack of access to technology. Understanding import duties is crucial for analyzing this news because it allows us to grasp the economic implications of trade agreements and the trade-offs involved in balancing the interests of different stakeholders. It also underscores the need for policymakers to consider the potential impact on vulnerable sectors when negotiating trade deals.

Source Topic

J&K Apple Traders Concerned Over India-U.S. Trade Deals

Economy

UPSC Relevance

Important for UPSC GS Paper 3 (Indian Economy, Trade Policy), frequently asked in both Prelims and Mains. Understanding import duties is crucial for analyzing India's trade policy, its impact on domestic industries, and its relationship with other countries.

Evolution of Import Duties in India

Shows the historical trend of import duties in India, from high protectionism to liberalization.

1950s-1960s

High import duties (exceeding 100%) to protect nascent industries.

1991

Economic liberalization initiated by the Narasimha Rao government, leading to gradual reduction in import duties.

2023

Basic Customs Duty (BCD) imposed on certain electronic components to boost domestic manufacturing.

2024

Review of import duties on various agricultural products to balance interests of farmers and consumers.

2025

India and the UK continue negotiations on a Free Trade Agreement (FTA), focusing on reducing tariffs.

January 2026

India and the U.S. announce a trade deal framework including reduced tariffs on certain agricultural products.

February 2026

Concerns raised by apple traders in J&K regarding reduced import duties on apples from the U.S. and EU.

Connected to current news

This Concept in News

1 news topics

1

J&K Apple Traders Concerned Over India-U.S. Trade Deals

23 February 2026

This news highlights the protective aspect of import duties. The J&K apple growers are worried because reduced duties challenge the protection they previously enjoyed. The news demonstrates how import duties can directly impact specific sectors and livelihoods. The potential influx of cheaper apples could force local growers to lower prices, reducing their profits and potentially leading to job losses. This situation also reveals the limitations of import duties as a long-term solution. While they can provide temporary protection, they may not address underlying issues such as lower productivity or lack of access to technology. Understanding import duties is crucial for analyzing this news because it allows us to grasp the economic implications of trade agreements and the trade-offs involved in balancing the interests of different stakeholders. It also underscores the need for policymakers to consider the potential impact on vulnerable sectors when negotiating trade deals.