Tariffs: What They Are and Why They Matter for Indian Startups

Ever wondered why the price of a gadget jumps after it lands in India? The jump often comes from tariffs – taxes that the government adds on imported goods. For a startup, tariffs can change the cost of raw material, affect pricing, and even shape the whole business model. Understanding how they work saves you surprise expenses and helps you plan better.

How Tariffs Change Your Cost Structure

When you buy components from abroad, the customs department calculates a duty based on the product’s classification. A 10% duty on a ₹1 lakh order adds ₹10,000 instantly. That extra cost either hits your profit margin or pushes the final price up for customers. Many founders try to absorb the tax, but that can squeeze cash flow fast, especially in the early months.

One quick trick is to check if the product falls under any exemption or lower‑rate category. Some tech parts, for example, enjoy reduced duties under the Make in India push. If you qualify, you can ask your supplier for the correct HS code and keep the tax bill low.

Practical Tips to Manage Tariff Impact

First, map out every imported item and note its duty rate. A simple spreadsheet with columns for item, HS code, duty % and landed cost gives you a clear picture. Second, negotiate with suppliers for FOB pricing – that means the price stops at the port, and you know exactly what you’ll pay in customs.

Third, consider local sourcing. Even if a small Indian manufacturer charges a bit more, you might avoid a 20% duty and end up cheaper overall. Finally, keep an eye on policy changes. The government revises tariff rates every budget, and a small tweak can turn a profitable product into a loss‑maker overnight.

Remember, tariffs aren’t just a tax; they’re a strategic factor. By treating them like any other cost, you can price smarter, protect margins, and stay ahead of competitors who ignore the hidden fees.

India-UK FTA Talks Set to Resume: Leaders Aim for $120 Billion Trade Target

7.05.2025 By: Aarav Bhatnagar

India and the UK are restarting FTA negotiations in February 2025, with top ministers meeting in Delhi to push a trade pact. Their goal: double trade to $120 billion by 2030, cut tariffs, boost key sectors, and ease rules for Indian workers in Britain.