Since 2007, the talks on the India-Europe Trade Agreement have been stalled due to India's high tariffs. The tariffs on agricultural goods are 38% and 100% for automobiles, wine, and processed foods. India is taking these initiatives to enhance self-reliance by imposing strict investment barriers under the "made in India" initiative, which favors the domestic market but limits foreign access and competition. On the other hand, the EU's average industrial tariff is below 5%, creating a significant imbalance in market forces despite India having the largest consumer market. Therefore, such protectionist policies hinder global economic integration.

In 2024, India maintained a trade surplus of $15.17 billion, exporting goods worth $75.85 billion while importing $60.68 billion, despite imposing high tariffs. Negotiations on the India–European Union free trade deal have been delayed by several issues, particularly India's unwillingness to adopt EU rules such as the Carbon Border Adjustment Mechanism and the Corporate Sustainability Reporting Directive.

The U.S. Most Favored Nation (MFN) tariffs were raised from 17% to 39% on agriculture; for that matter, the U.S. Trade Representative (USTR) ranks India among the world's most tariff-protected economies. In addition, U.S. exports face steep duties of up to 150% on key goods, limiting fair market access.

The U.S. faces duties of 45% on vegetable oils, 50% on motorcycles, 60% on automobiles, 70% on natural rubber, and 100–150% on alcoholic beverages, coffee, raisins, and walnuts; key barriers preventing American products from fairly competing in India. In 2025, the U.S. imposed 50% retaliatory tariffs on Indian goods, affecting $48 billion in exports, causing a 37.5% drop in Indian exports to the U.S. within four months. Current discussions involve reducing tariffs to 15-16% if India limits certain practices.

India's trade policies remain among the most protectionist among major economies. In 2024, its average MFN applied tariff stood at 15.9%, nearly twice the global average of 8%. In the global trade market, the imbalance and high tariff regime significantly affect foreign exporters, especially those in agriculture.

India is obliged to remain within the ceiling limits set by the World Trade Organization (WTO) and is not permitted to exceed them. However, India raised tariffs on over 2300 products, 45% of the tariff boundary, particularly in textiles, footwear, electronics, and consumer goods. While imposing sector-specific duties and import bans, they were strongly criticized by the WTO, the EU, the U.S, and Japan for disturbing the supply chains,

In Addition, India creates technical barriers, such as license requirements, bans on used goods, quantity restrictions, and mandatory local testing, even for products already certified to International standards. These policies make India the world's most prolific user of non-tariff barriers (NTBs).

In addition, in 2024, India expanded its Quality Control Orders (QCOs) to over 1,000 NTBs, affecting sectors such as the toy, pharmaceuticals, and steel industries. These barriers make India a challenging market for foreign exporters despite its large consumer base and growing influence.

In the Region, India has often turned down Pakistan's request to resume trade in the best interests of its country. However, India is dragging politics into economic and sports battlegrounds, which sabotages the viability of regional organizations such as the South Asian Association for Regional Cooperation (SAARC).

There are many motives behind such policies. The Bharatiya Janata Party (BJP) is the proponent of crony capitalism, and it is now unmasking the nexus between Prime Minister Narendra Modi and the Adani group. In addition, local market forces fear that imported goods could perform better; and business elites influence the government to use high taxes and strict rules to protect their industries.

Considering all these efforts, protectionist policies can slow down global trade and make it more difficult for economies to open up. Free trade and fair access to markets are the essence of the current global order. These are important for keeping markets competitive and stopping a few powerful businesses from taking over.

But if India doesn’t adjust its economic policies, both sides may gain very little, and this could hurt the economy in the region and beyond

Abdul Mussawer Safi holds a Masters Degree in International Relations and is keen to explore the regional dynamics and traditional and non-traditional attributes of South Asia.