India vows to avoid protectionist signals on trade, says top official

By Nikunj Ohri and Manoj Kumar

NEW DELHI (Reuters) - India does not want to give any signal that it is protectionist, the top bureaucrat in the finance ministry said, after slashing import duties on high-end motorcycles, amid U.S. President Donald Trump's moves on tariffs.

Sunday's remarks came a day after Trump ignited a trade war with sweeping tariffs on Canada, Mexico and China. None were aimed at India, although Trump had called it a tariff abuser during his election campaign last year.

"We don't want to give anybody any signal that we would like to be protectionist," Finance Secretary Tuhin Kanta Pandey told Reuters in an interview after the budget, unveiled on Saturday.

"Our stance is that we don't want to increase protection."

Trade and immigration issues will take centrestage when Prime Minister Narendra Modi meets this month with Trump, whose administration India has sought to placate after his accusations that its tariffs hurt prospects for American firms.

India's budget cut import tariff slabs, reducing average basic customs duties on scores of items such as raw materials for domestic industries like textiles and automobiles, Pandey added.

Average import tariffs on essential goods, mainly items of food and raw material, range from zero to 5%, while those on capital goods range from 7.5% to 10%, with about 10 items in higher tax categories, he said.

Trade analysts were not convinced the cuts were sufficient, however.

"India's average tariffs are still much higher compared to the United States, Japan and China," said Ajay Srivastava, founder of Global Trade Research Initiative, a think tank based in Delhi.

While India was slashing peak rates of basic customs duties used for international comparisons, it was adding various surcharges on imports, implying that the total tax burden remained high, he said.

Trump's administration has upped the ante by recently raising the issue of undocumented Indians living in the United States, a topic on which India's foreign ministry has said it is in dialogue with U.S. authorities.

India slashed custom duties on motorcycles, such as those from Harley-Davidson, with engine capacity of 1,600 cc or more, to 30% from 50% on fully-built imports in the budget, which Pandey said also cut average tariffs to 11% from 13%.

"We should give the right signal for the world, as well as to our own industry," Pandey added, saying the tariff measures aimed at helping domestic companies initially but would be phased out as those industries developed.

(Reporting by Nikunj Ohri and Manoj Kumar; Editing by Clarence Fernandez)