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Dated: 01.10.2025

India–EFTA Trade and Economic Partnership Agreement (TEPA)

Introduction

In the dynamic world of international trade, understanding tariff rates and duty structures is essential for businesses, importers, and exporters. Tariff rates and duty classifications directly impact the cost of goods, pricing strategies, and compliance with trade regulations. This blog provides a detailed overview of goods categorized under various tariff codes, their corresponding duty rates, and actionable insights for navigating the complexities of global trade.

What Are Tariff Rates and Duty Rates?

Tariff rates and duty rates are taxes imposed on goods imported or exported across borders. These rates vary based on the classification of goods, their country of origin, and applicable trade agreements. They serve multiple purposes, such as regulating trade, protecting domestic industries, and generating revenue for governments.

Classification of Goods

Goods are classified using standardized systems like Harmonized System (HS) codes, which are internationally recognized numerical identifiers. These codes ensure uniformity in categorizing goods, making it easier for customs authorities to determine applicable tariff rates. Each HS code corresponds to a specific product category, and the duty rate is applied accordingly.

Understanding Customs Duty Exemptions ​

India’s trade policies include exemptions on customs duties for specific goods imported from certain countries, such as Switzerland, Norway, Iceland. ​ Notification No. ​ 41/2025-Customs, Notification No. ​ 42/2025-Customs, Notification No. ​ 43/2025-Customs outlines these exemptions, effective from September 30, 2025.

Key Highlights of Notification No. 41/2025-Customs

• Tariff Rates:
  • Zero tariff rates (0.00%) apply to many goods, including essential items, raw materials, industrial tools, machinery, and textiles.
  • Low tariff rates (2.00% to 6.00%) are applied to processed metals, basic machinery, and agricultural equipment.
  • Higher tariff rates (up to 18.00%) are imposed on luxury items, finished products (e.g., air conditioners, refrigerators), and specialized tools.
  • Conditional duty rates are calculated as a percentage or a fixed amount per unit, whichever is higher (e.g., “9% or Rs. ​ 121.5 per sq. ​ mtr., whichever is higher”). ​
• Goods Classification:
  • Goods are categorized based on HS codes for uniformity and accurate tariff application.
  • Key sectors covered include metals, machinery, consumer goods, medical equipment, textiles, and specialized tools.
• Purpose:
  • The notification aims to regulate imports, protect domestic industries, promote trade compliance, and streamline tariff structures.
• Country-Specific Provisions:
  • Certain exemptions apply to goods imported from Switzerland, provided proof of origin is established under trade agreements. ​
• Effective Date:
  • The notification comes into force on October 1, 2025. ​
• Additional Details:
  • Specific tariff rates and Agriculture Infrastructure and Development Cess (AIDC) apply to goods like alcoholic beverages, with AIDC rates ranging from 75% to 100%. ​
  • Businesses are advised to classify goods correctly, monitor tariff changes, and leverage trade agreements to optimize costs and ensure compliance.

Key Highlights of Notification No. 42/2025-Customs

1. Scope of Exemptions
   • Exemptions apply to customs duties, Agriculture Infrastructure and Development Cess (AIDC), and Health Cess for goods listed under specific tariff items.
2. Conditions for Exemption ​
   • Goods must originate from Norway, with proof of origin provided to customs authorities. ​
3. Categories of Goods
   • Includes agricultural products, industrial raw materials, and medical items, with varying rates for Basic Customs Duty (BCD).

Implications for Importers

1. Cost Savings: Reduced import costs for eligible goods.
2. Bilateral Trade: Strengthened trade relations between India and Norway.
3. Compliance: Importers must meet documentation requirements to avail of exemptions. ​

Detailed Analysis of Tariff Rates Tariff rates are taxes imposed on goods crossing international borders, categorized by Harmonized System (HS) codes. These rates vary based on the type of goods, their classification, and the country of origin.

Examples of Tariff Rates by Categories ​

1. Textile Products
   • HS Code 56029090: 8.57%
   • HS Code 61102000: 17.1% or Rs. ​ 72.9 per square meter, whichever is higher. ​
2. Footwear
   • HS Code 64011010: 16.00%.
3. Marble and Granite Slabs ​
   • HS Code 68022120: 17.14%.
4. Glass Products
   • HS Code 70010010: 4.00%.

Key Observations

1. Uniformity: Consistent rates for certain categories like footwear.
2. Protective Measures: Higher rates for premium goods to protect domestic industries.
3. Encouragement for Trade: Lower rates for essential goods like glass products.

Upcoming Changes in Customs Duty Rates The Central Board of Indirect Taxes and Customs (CBIC) has announced revised customs duty rates effective October 1, 2025. These changes aim to align duties with evolving trade policies.

Key Highlights

1. Effective Date: October 1, 2025. ​
2. Scope: Covers machinery, electronics, furniture, vehicles, and more.
3. Duty Adjustments: Examples include:
   • HS Code 84179000: 6.75%.
   • HS Code 85044030: 18.00%.
4. Zero-Duty Items: Exemptions for essential imports.

Implications for Businesses

1. Compliance: Review updated duty rates and ensure adherence.
2. Cost Management: Assess financial impact and adjust strategies.
3. Preparation: Update systems and train staff for smooth transitions.

Why Are Duty Rates Important? Understanding duty rates is essential for:

1. Cost Planning: Calculating total import costs.
2. Compliance: Avoiding penalties and ensuring adherence to regulations.
3. Strategic Planning: Identifying cost-effective sourcing options.

How to Navigate Customs Duty and Tariff Rates ​

1. Identify HS Codes: Determine the HS code for your product.
2. Review Duty Rates: Refer to official resources for applicable rates.
3. Plan Imports: Use duty rate information for budgeting and compliance.
4. Consult Experts: Engage trade consultants for accurate calculations.

Key Highlights of Notification No. 43/2025-Customs

1. Effective Date: ​
   • The revised customs duty rates will come into effect from October 1, 2025, allowing businesses sufficient time to adapt. ​
2. Goods Covered:
   • The notification impacts a wide range of goods, including industrial machinery, medical equipment, automotive parts, furniture, toys, electrical machinery, and luxury items.
3. Duty Rate Adjustments: ​
   • Zero Duty Rates: Essential goods like certain medical devices, musical instruments, and optical equipment will attract 0% customs duty.
   • Moderate Rates: Items such as industrial machinery and furniture will have rates like 8.57%, 9.00%, or 13.50%.
   • Higher Rates: Luxury and non-essential goods may attract rates as high as 60%.
4. Special Provisions:
   • Specific items like USB cables, electric conductors, and PCBA components have distinct duty rates to encourage domestic manufacturing and reduce import dependency.
5. Exemptions for Icelandic Goods: ​
   • Customs duty exemptions are granted for goods imported from Iceland, including waivers on Basic Customs Duty (BCD), Agriculture Infrastructure and Development Cess (AIDC), and Health Cess.
   • Importers must prove the Icelandic origin of goods as per the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020. ​
6. Comprehensive Tariff Structure:
   • The notification provides detailed classifications under Harmonized System (HS) codes, specifying applicable rates for thousands of goods, ranging from 0% to over 80%.
7. Impact on Stakeholders:
   • Importers and Exporters: Adjustments in pricing and supply chain strategies are necessary.
   • Domestic Manufacturers: Higher duties on imports may benefit local industries, aligning with the “Make in India” initiative.
   • Consumers: Essential goods may become more affordable, while luxury items could see price increases.
8. Economic Objectives:
   • The notification aims to promote domestic manufacturing, strengthen trade relations (especially with Iceland), and align with international trade agreements to foster economic cooperation.

Conclusion

Understanding tariff rates, duty structures, and classifications is essential for successful trade operations. By leveraging this knowledge, businesses can navigate the complexities of international trade, optimize their operations, and achieve sustainable growth. Whether you’re importing textiles, exporting machinery, or purchasing industrial goods, this guide serves as a comprehensive resource for making informed decisions in global commerce.

In case you face any issues related to Indirect Tax-Customs, GST, Foreign Trade Policy (FTP), Arbitration matters and Central Licensing and related advisory matters in India then please feel free to get in touch with SJ EXIM Services.

We offer Legal advice and litigation support in matters related to Indirect Tax-Customs, FTP, other Indirect Tax matters & Arbitration law, all sorts of Central licensing and related matters. Come and explore the new way of doing business with us!

Source: CBIC, Ministry of Finance, Govt. of India

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