THe Blog

February 15, 2018

Budget 2018: Higher Import Tariffs And Make In India

In this Swarajya article, R. Jagannathan, Editorial Director, Swarajya, quotes Resident Senior Fellow Vivek Dehejia's piece on Union Budget 2018's impact on trade policy. Excerpts:


"The budget decision to raise import tariffs on a wide range of items has been roundly criticised by many economists as “protectionist” and counter-productive in the long-run. Among the critics are former NITI Aayog vice-chairman Arvind Panagariya, his successor Rajiv KumarVivek Dehejia, and a part-time member of the Prime Minister’s Economic Advisory Council, Surjit Bhalla, among others.


In his budget speech, Finance Minister Arun Jaitley said he was “making a calibrated departure from the underlying policy in the last two decades, wherein the trend largely was to reduce the customs duty. There is substantial potential for domestic value addition in certain sectors, like food processing, electronics, auto components, footwear and furniture. To further incentivise domestic value addition and Make in India in some such sectors, I propose to increase customs duty on certain items.”


The critics have rightly pointed out that import-substitution policies have usually failed, and that any artificial curbs on imports often impact exports as well..."


Read the whole article here.

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