Tariff Policy Balancing Act Essential in Globalised Economy, Says Commerce Secretary Rajesh Agrawal

Commerce Secretary Rajesh Agrawal Stresses Importance of Tariffs and Predictability in Global Trade

In a keynote address at the CII Annual Business Summit 2026, Commerce Secretary Rajesh Agrawal emphasized the need for tariffs in a fragmented and unequal global economic environment. Agrawal noted that the world economy is no longer operating on a level playing field, making tariffs a necessary tool for countries at different stages of economic development.

The Commerce Secretary highlighted the challenges created by uncertainty in tariff regimes across borders, stating that industries are unable to make long-term investment decisions due to a lack of tariff predictability. This uncertainty also prevents industries from becoming an integral part of global supply chains.

Agrawal described this as a "dichotomous challenge," requiring governments to strike a balance between protecting domestic interests through tariffs and ensuring that industries are not adversely impacted by policy unpredictability. He acknowledged that India has evolved a "unique approach" towards Free Trade Agreements (FTAs), which differ from traditional trade pacts by extending beyond tariff reduction.

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India has signed nine FTAs with 38 economies over the last six years, with the objective of creating a predictable trade, tariff, and regulatory framework that encourages both domestic and foreign investments. Agrawal emphasized that the goal of these FTAs is to provide a very predictable trade, tariff, and regulatory environment to investors, enabling the growth of trade and attracting domestic and foreign investments.

However, the Commerce Secretary cautioned that trade agreements alone would not automatically translate into economic gains unless all stakeholders actively leverage the opportunities created. He urged industry, consumers, and governments to contribute towards maximizing the benefits arising from India's trade agreements, stating that "industry will have to walk the talk" and that "everybody has to contribute, all stakeholders, even governments, will have to walk the talk."

Comparison of India's FTAs

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Note: The percentages represent the percentage of tariff reduction achieved through each FTA. The other benefits listed are examples of the additional advantages provided by each FTA.