The Indian Economy Blog

February 16, 2006

Biased Import Tariffs?

Filed under: Infrastructure,Trade — Yazad Jal @ 6:58 pm

Kaushik Das points out the bias in import tariffs, focussing on the automobile sector.

The import duty on foreign vehicles still attracts a 103.39 percent duty, which is unheard of in any developed country.

The steel sector currently has an import duty of 5 percent, which was 45 percent just a decade ago. Despite the reduction, Indian steel manufacturers have survived — and managed to provide excellent quality steel at globally competitive prices.

As usual, the unintended consequence is telling. Poor Indians are prevented from using cheaper and safer public transport. And Das is only looking at import duties on new vehicles. The import of second hand vehicles is banned. So, that five-year old Mercedes bus which might be more fuel efficient and less polluting than what I currently see on Indian roads is not an option at all!

3 Comments »

  1. I was wonder what article of the constitution gives government to selectively target imports of specific items like this? I though the government only had enumerated powers and nothing more.

    Comment by Ashish Hanwadikar — February 21, 2006 @ 9:25 pm

  2. In fact tariffs are basically imposed world over to protect their own backyard industries from cheaper or subsidised products produced elsewhere. Even if tariffs are lifted on benz cars and buses, government makes no significant money. let’s stay with them. fortunately government has reduced a lot of tariff on electronic goods. recollect a computer would have costed double the price 5 years ago.

    Comment by smitha — February 24, 2006 @ 6:44 am

  3. The last thing India needs is more cars. Look at the traffic jams and pollutions of the big cities. With recent affluence, cars have become more affordable. Remove the 103% duty on the cars and you would see the amount of cars on the road double in a short time. Roads are not getting any wider anytime soon. What india needs is a 206% duty on cars to subsidize excellent public transport systems.

    Comment by Mahathma Ganduji — July 21, 2006 @ 7:48 am

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