Some duties in India may be fixed, but don’t expect wholesale changes
As India’s 2008 budget is being assembled, the country’s finance ministry is under pressure from the private sector to end some anomalies related to import duties.
For instance, as reported recently by the Economic Times, the duty to bring in natural rubber is 70 percent, while the duty to import tires is 10 percent. In this case, the restrictive duties on the raw material are to protect domestic producers, especially in the southern state of Kerala, where rubber is a key commodity to the local economy.
Other commodities, however, face similar circumstances. Imported ceramic products, the story said, face a duty of just less than 6 percent, while tools and raw materials used to make ceramics face a 10 percent duty.
There are some categories of products — such as televisions and TV components — where the unfinished goods attract the same duty as the finished good. But the private sector wants the country’s finance officials to look at normalizing duty rates, and cutting out duties that restrict international trade and hurt Indian competitiveness.
While some of these anomalies might be fixed, Finance Minister P. Chidambaram said that a wholesale overhaul of the country’s duty structure is very unlikely. That means products with duties that the West considers excessive — like liquor and a handful of other luxury items — will likely remain excessive, even as India faces a U.S.- and EU-led investigation from the WTO into its import duty structure on certain goods.