NEW DELHI: India should adopt a three-pronged strategy of tax moderation, tighter control on non-essential imports, and quicker enforcement of trade-remedy measures to shield the economy from disruptions arising out of the West Asia crisis, experts said at a roundtable organised by policy think tank Think Change Forum (TCF) on Tuesday.
The recommendations were part of a white paper titled Economic Ringfence Amid the West Asia Crisis: A Three-Point Agenda for Export Competitiveness, Import Discipline and Trade Defence, released by TCF at an event held at the India International Centre in New Delhi.
The paper argued that India needs to move beyond “reactive subsidies” and instead adopt structural measures aimed at strengthening domestic manufacturing competitiveness and conserving foreign exchange reserves amid global volatility triggered by the West Asia crisis.
According to the paper, India’s merchandise imports stood at $774.98 billion in FY26, while exports were at $441.78 billion, resulting in a trade deficit of over $333 billion.
Experts participating in the discussion suggested that imports of luxury, non-essential, and demerit goods should be shifted from the Open General Licence framework to restricted licensing channels. The paper highlighted imports of chocolates and cocoa preparations worth $135.9 million, beauty and personal care products worth about $393 million, and tobacco-related imports exceeding $116 million despite the existence of strong domestic manufacturing capabilities.
Rajeev Gupta, managing director at RDI and an economist, said India should use the current crisis to build stronger domestic manufacturing ecosystems capable of producing premium and high-value products locally. “Over time, India must strengthen its own value-added industries, innovation ecosystems, and consumer confidence so that domestic products are increasingly perceived with the same aspirational value that is currently associated with imported brands,” he said.
The roundtable also raised concerns over the increasing rejection of anti-dumping recommendations made by the Directorate General of Trade Remedies (DGTR). The paper said rejection rates, which were only 0.5 per cent between 1991 and 2020, rose to as high as 81 per cent between November and December 2025.
Participants called for a time-bound “comply-or-explain” mechanism for implementing DGTR recommendations and sought faster notification of anti-dumping measures to protect domestic industry from low-cost imports.
Akhilesh Ranjan, former member of the Central Board of Direct Taxes, said tax policy should be viewed not merely as a revenue collection tool but also as an instrument to support innovation, technology development, and long-term economic growth.
“One of the biggest hidden costs for Indian businesses today is compliance volatility. Frequent procedural changes, shifting filing systems, and increasing litigation burdens create uncertainty and lock up productive capital,” said Rajat Mohan, managing partner at AMRG Global. He added that reducing compliance costs and bringing greater stability to tax administration can itself act as an economic stimulus during periods of global disruption.
The discussion also focused on correcting inverted duty structures in sectors such as chemicals, electronics, textiles, and agri-processing, where imported finished goods often attract lower duties than raw materials or intermediate inputs. Experts argued that such anomalies weaken domestic manufacturing competitiveness.
“If Indian industry has to compete globally, then the policy framework must ensure that taxes, duties, and compliance structures do not unnecessarily inflate the final cost of production. Inverted duty structures and blocked cost mechanisms continue to weaken domestic competitiveness precisely when India needs stronger capacity creation, export expansion, and investment within the country,” said economist Yogendra Kapoor.
The white paper further proposed a dynamic tariff calibration framework for critical inputs such as crude oil, steel, and fertiliser feedstocks, along with a ring-fenced input tax credit refund mechanism for natural gas used in fertiliser production.
“There is a fundamental difference between subsidies and incentives. Subsidies merely reduce an immediate burden, whereas intelligently designed incentives can shape the direction of economic growth itself. India now needs a more strategic fiscal architecture that encourages investment, innovation, technology adoption, and long-term industrial competitiveness,” said Devendra Saxena, former principal chief commissioner of income tax, Mumbai.
Source: Business Standard
