| Date: |
23-07-2015 |
| Subject: |
India’s import duty hike raises red flag at WTO |
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NEW DELHI: For years the government has been talking about moving to Asean rates of import duty, which is around 5%.
But, a recent review of India's trade policy has showed that the average applied customs duty rate went up to 13% in 2014-15, compared to 12% at the time of the last review in 2010-11 — a move that has seen some red flags go up at the World Trade Organization. This means that the applied rate is much higher: Between 10% and 300% for farm products and up to 150% for industrial goods. On an average the average applied customs tariff was around 9.5% for non-farm goods.
For years, the developed as well as some of the developing countries have been pressing India to lower tariff barriers, arguing that the economy has developed. But given local sensitivities, the government has failed to go for a sharper reduction.
"In UPA-I, the focus was to aggressively towards Asean rates but some of the decisions didn't come through," acknowledged an officer, who was involved with the deliberations. Sources pointed out that one of the key reasons for the increase in average tariffs was a hike in duty on farm goods as well as items such as gold, silver and even crude oil.
In addition, specific duty in sectors such as textiles — which was an important element of the move towards Asean rates — did not materialize as the domestic industry has managed to get the government to retain protection as well as subsidies. In sectors such as automobiles, despite the reduction in recent years, tariffs remain the highest in the world, although domestic production has gone up significantly and almost all the major auto makers have now set up shops in the country.
For long, the domestic industry has managed to convince successive governments that import barriers in the form of high customs duty are needed to ensure that Indian industry is not adversely impacted by higher costs on account of poor infrastructure and transaction problems.
In any case, reduction in import duty on agricultural products is politically unpalatable. But, all these have not gone down well at the WTO with several countries, ranging from Argentina and South Korea to Oman and the US, demanding lowering of barriers to trade.
The average tariff on agricultural products is 36.4%, Argentina pointed out. Oman said 25% of India's tariff lines remain unbound, adding to the complication.
Source : timesofindia.indiatimes.com
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