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Informist, Tuesday, Dec. 16, 2025

 

--CONTEXT: Sitharaman speaking in Times Network India Econ Conclave event 
--Sitharaman: Globally trade is not free, tariff has been weaponised 

 

NEW DELHI – Global trade is neither fair nor free with many countries weaponising tariff, Finance Minister Nirmala Sitharaman said Wednesday, calling for India to make its way through current geoeconomics carefully. "Trade is getting weaponised through tariff, through many other measures, and India will have to negotiate its way carefully through this," she said. 

 

India has been advised in the past that it should have freer trade or that it is looking inwards with too many barriers, but that was never India's intention, Sitharaman said while speaking at the Times Network India Economic Conclave event here. "While it is good to hear people give their advise, India, and countries like India who have aspirations, will have to mark their own goal post," the finance minister said. 

 

The finance minister's comments come at a time when India is navigating through many tariff and non-tariff barriers in the trade sector. To that extent, India is also negotiating trade agreements with those countries to lower the blow of tariffs. 

 

Most importantly, the US--India's top export destination--in August imposed 50% tariff on goods imports from India, including a punitive tariff of 25% for New Delhi's continued purchases of crude oil from Russia. India has been batting for the trade agreement to shield its huge exports from the 50% tariff, though the trajectory of India–US trade talks has fluctuated significantly over the past nine months.

 

Mexico, too, Thursday imposed tariffs of up to 50% on imports from non-preferential trade partners, including India, a move that could hit New Delhi's annual $5.75 billion shipments to the Central American country. The duties are set to kick in from Jan. 1 and will apply to electronics, apparel, chemicals, and many engineering goods, which include automobiles and metals.

 

India has also been negotiating for a trade agreement with European Union, which has imposed a non-tariff barrier on Indian goods. The two sides are currently working closely on finalising the non-sensitive industrial tariff lines and contentious issues like steel and auto sector-related problems, the Carbon Border Adjustment Mechanism, and other EU regulations that still require further discussion.

 

According to Sitharaman, India has never weaponised tariff and has focussed on its domestic strengths, bolstering it through structural reforms. "The services sector is contributing to the GDP, we have to now spend time to see how the manufacturing sector picks up, and the government will have to spend money on reasearch and development for it," she said. 

 

Regarding structural reforms, Sitharaman said that the government is trying to deepen the bond market so that more funds can come in, not just for equity but also the bond market. 

 

She also said that fiscal management has been a hallmark of the current government but the same accountability, transparency, and fiscal management as a priority will have to be understood and exercised by states. Unless states' debt-to-GSDP is managed better, and their debt stock is brought down with debt servicing due in high interest rate cycle, they will have to borrow to service the loans, she said. "That's a poor plain in the fiscal terrain."

 

From 2026-27 (Apr-Mar) onwards, the Centre has announced its intent to shift its fiscal consolidation benchmarking to metrics favoured by rating agencies, such as the debt-to-GDP ratio and monitoring interest expenses. The Budget documents for FY26 said the government aims to keep the fiscal deficit each year such that the central government debt will be on a declining path as a percentage of GDP. An overall improved debt metric of India, however, also hinges on how states manage their debt.  End

 

Reported by Priyasmita Dutta

Edited by Akul Nishant Akhoury

 

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