Non-Tariff Barriers

April 24, 2025

Non-Tariff Barriers (NTBs) have emerged as an issue of contention in US-India trade ties. Recently, US Vice President JD Vance emphasised the need for India to remove these barriers to enhance market access.

Definition of Non-Tariff Barriers

Non-Tariff Barriers refer to restrictions that hinder trade without imposing taxes on imports or exports.
These barriers can arise from government regulations, policies, or private sector practices aimed at protecting domestic industries.
They can impact the flow of goods across borders.
Examples include import bans on specific products, product-specific quotas limiting the quantity of goods, complex Rules of Origin that complicate product classification etc.

Impact on Trade

NTBs increase costs for traders. Exporters often face higher expenses due to compliance with destination country regulations. For instance, they may need to undergo mandatory testing or certification. These hurdles can lead to shipment delays and uncertainties, complicating international trade dynamics.

Challenges Faced by Indian Exporters

Indian exporters encounter various NTBs in international markets. These include issues related to pesticide levels and contamination, leading to rejections of consignments. Additionally, stringent registration processes for products can hinder trade. For example, exporting industrial goods to countries like China requires extensive documentation and fees.

US Concerns Regarding Indian NTBs

The United States has flagged several NTBs in India. These include import restrictions on certain animal products and mandatory quality control orders for equipment. The US National Trade Estimate Report identified issues such as non-automatic import licenses and government trading monopolies affecting trade dynamics.

Barriers in Service Sectors

In addition to goods, NTBs also affect service sectors in India. Foreign investment in financial services and retail faces limitations on equity. Furthermore, restrictions on digital trade and electronic payment providers can hinder the growth of various services.

India’s Response to NTBs

India is actively addressing the challenges posed by NTBs. The government is engaging in bilateral discussions with affected countries. Additionally, the Department of Commerce is developing a platform to register and resolve NTBs faced by exporters.

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