Union finance minister Nirmala Sitharaman said on Wednesday the government’s goal is to completely remove the fear of a “tariff wall” around the Indian market, but it has to be carefully calibrated and cannot be a hurried exercise.
Speaking at Business Standard Manthan, 2026, the minister said the government has carefully analysed the tariff protection given to individual sectors, how long it was given and the extent of domestic production capabilities developed before lowering tariffs in the Union Budget 2026-27.
“The goal is to completely remove this fear of tariff wall, but I cannot harm our own industries in a rush to complete,” she said. “Our approach to tariff rates is meticulous and not a one-size-fits-all solution. We meticulously examine item by item, looking at which industries produce what, if they are new, or if they have received protection for an extended period, sometimes over 20 to 30 years. If an industry hasn’t established itself despite prolonged protection, we consider opening it up to allow competition.”
She identified global uncertainties and climate-related events, such as sub-optimal or excessive monsoon, as downside risks to the Indian economy, but said the government’s effort has been to be prepared for them. “We hope for a favourable monsoon, avoiding both excessive and insufficient rainfall, as climate-related disasters are hard to manage.”
Foreign investments
She said that while the country aspires for more foreign direct investment (FDI), the availability of domestic money in the market has diversified businesses’ funding base, making the country less dependent on FDI. Global capital movements are influenced by external forces, so we must wait to see how these uncertain times unfold, she added.
The reform roadmap for the financial sector to be recommended by an expert committee will help prepare banks to finance India’s growth to a developed economy, the minister said.
Sitharaman also said the foreign investment screening norms introduced after the pandemic enable the government to know the ultimate beneficial owner of capital in line with the transparency requirements for cross-border fund flows.
The minister said underutilization of central funds tied to reform requirements by some states was often shaped by political considerations rather than fiscal constraints.
A part of the Centre’s Special Assistance to States for Capital Investment (SASCI), a 50-year interest-free loan, is tied to various types of reforms. For some of those funds, there are only a few takers and none for some, the minister explained.
In some schemes, states avoid availing of the funds if they do not see political mileage, she said, highlighting the limits the Centre has in pushing states to take these funds. “Citizens need to be better informed, and the media has a very big role in this.”
She said some countries invest in India without demanding a bilateral investment treaty or BIT, and Indian entities also invest abroad without them, which suggests that the global investment landscape is dynamic, and investment decisions are not solely driven by the presence of a BIT. “I don’t wish to imply that I am against BITs, but it’s worth noting that countries like China have prospered with significant investments without having BITs with many nations.”
Banking reforms
She also said this is the best time to establish a high-level committee on banking, as Indian banks have performed remarkably well over the last 10 years.
“There cannot be a better time to ask: What next for Indian banks? This is particularly important as India aspires to become a developed nation by 2047. Are our banks in a position to fund this transformation? Are they capable of keeping the economy on an even keel? From a position of strenghttps://www.livemint.com/industry/banking/creditdeposit-ratio-cd-ratio-banking-system-private-banks-icici-bank-sbi-11770054024234.htmlth, we are constituting a committee to examine these issues and advise us on what needs to be done for our banking sector by 2047. I want the outcome to be ambitious,” she said.