Tariff Reform:
India's customs tariff rates have been declining since 1991. The "peak" rate came down from 150 percent in 1991-92 to 40 percent in 1997-98. The downward momentum was reversed the next year with the .imposition of a surcharge. This momentum resumed with the reduction of the "peak" rate to 35 percent in 2001 -02 and 30 percent in 2002-03. "Peak" rate (applicable to all manufactured and mineral products except alcoholic beverages and automobiles) was reduced to 20 percent at the end of 2003-04. It is therefore quite evident that India has drastically reduced the level of tariff, particularly industrial tariff, in the period since 1991. Many research studies have argued that this reduction should not, however, be attributed to India's commitment under WTO because the tariff rates have in most cases been brought down to a level well below the rates committed. It seems reasonable to argue that the tariff reform undertaken by India in the last 14 years was mostly done at India's own initiative (induced by the benefits expected from such reforms) and had little to do with India's commitment under WTO.
Similarly many researchers have studied the impact of India's trade reforms, particularly tariff reforms, on domestic industry. It appears that tariff reforms did not lead to a general surge in imports of industrial goods adversely affecting domestic industry. On the other hand, there is some evidence to indicate that tariff reform contributed to higher industrial productivity and better export performance. But, these effects however, cannot be ascribed to India's tariff commitments under WTO, since the tariff reform took place largely independent of the WTO.