07 February, 2020
2 Min Read
Syllabus subtopic: Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.
Prelims and Mains focus: about import tariff regime in India; amended proposed to it and its implications
News: Some of the budget proposals have the potential to revive the import substitution regime of the pre-1991 liberalization era. The old regime, which sought to protect domestic industries, bred an uncompetitive manufacturing sector. Mint explains the pitfalls of protectionism.
Tariffs in India vis-a-vis other countries
At 11.7%, India’s weighted average tariff is much higher than that of South Korea, the US and Japan. India was also way behind these countries in terms of machinery and transport equipment exports.
How are import tariffs expected to change?
Will duty hikes push up domestic prices?
Will there be unintended consequences?
Yes. Empowering government officials to take decisions on individual items raises the scope for corruption and policy errors. The outdated items on which customs duty has been withdrawn include CD writers, MP3/MP4/MPEG 4 players, and pre-recorded and audio cassettes. This also affects cassettes used by blind students and CDs used for educational purposes.
Will officials get more power and control?
Will the economy turn more competitive?
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