Drop in India’s tariffs
According to the latest World Trade Organization (WTO) data, India’s average applied import tariff dropped to 15% in 2020 from as high as 17.6% in the previous year. This is the steepest annual fall in about a decade and a half, albeit it is still higher than the 2014 level of 13.5%. It reflects a partial reversal of duty hikes that had marked India’s sustained push for import substitution through self-reliance and its response to the recent rise in trade protectionism in key economies.
However, this tariff fall may prove to be temporary as the government is undertaking an in-depth review of various customs duty exemptions this fiscal, unless imposts on scores of products are trimmed as well. Domestic industry, however, is seeking more protection, arguing that in the absence of credible structural reforms to bring down its costs (including costs of logistics, wage, electricity and credit) and provide it a level-playing field, allowing increased foreign competition is patently unfair.