Import duties seen in sync with global commitments

Amid repeated threats by Donald Trump on India’s ‘high tariffs’, the Economic Survey has said that import duties have not only come down over the years but are in sync with India’s global commitments.
At the same time, it also said that while tariffs can aid in competitiveness, they are an effective tool to develop certain industries. The comments come amid repeated demands from economists for govt to lower import duties.
In recent years, India has faced pressure from various countries – including the US, which under Trump has led a high-decibel campaign for steep duty cuts.But in several sectors, govt has resorted to raising import duties, at least temporarily, till domestic production capability is ramped up. Telecom handsets being a case in point, which also attracted action at WTO.
Govt has argued that India is not alone in using tariffs as a tool for industrial policy to develop certain sectors with the strategy dating back to the industrial revolution. It also cited the example of South Korea using tariffs in recent years to boost its domestic capabilities in sectors such as heavy chemicals with non-performers also punished for it.
“At a broader level, India’s import tariff policy has evolved over time, balancing domestic policy goals with the need to integrate into the global economy. Tariffs vary by sector, with considerations like protecting sensitive sectors from foreign competition and permitting access to important raw materials and intermediate goods. India has ensured that tariff policies comply with WTO rules and regulations. Over time, several efforts have been made to rationalise tariffs further and address the inverted duty structures,” the survey said.
While the focus is on countries such as India, which has been seeking to autonomously use the flexibility available to it on tariffs to promote areas of its interest, govt is also using it as a bargaining chip in trade negotiations as it seeks to enter into bilateral agreements with countries ranging from Australia to the UK and the European Union.
The survey also noted the increase in protectionism in recent years and the use of non-tariff barriers, which range from technical barriers to quality standards and price and export controls.