Raising Import Duty to Help Domestic/Indigenous Industry

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Despite declaration made in the World Economic Forum by the Narendra Modi that India is open for businesses, the Modi Government has raised import duty very frequently since 2-3 months. A situation of trade war may arise with this step of Modi Government as this could threaten the foreign direct Investment.

The Finance Minister Arun Jaitley had also declared the hike in custom duty for import of certain items with a motive to promote “Make in India” Programme.  Due to hike in import duty, Automobiles parts, Televisions, I-Phone, Cameras, Electricity Meter got expensive. It may cause the risk of trade wars from trade allies like US, China and Germany.

US President Donald Trump has also threatened to adopt tit for tat duties or a ‘reciprocal tax’ on import of Motorcycles from India. The German Ambassadors to India, Martin Ney has also raised the question on the decision to raise custom duty on the import of automobile parts.

This hike in custom duty on import of certain things would continue for another two-to-three years to help small and medium industries, said Vanaja Sarna, chair-person of India’s Central Board of Excise and Customs in an interview.
But the move may end up hurting local businesses, said Bipul Chatterjee, executive director at New Delhi-based think tank CUTS International.

A hike of 15 to 20 percent is not much for Chinese and South Korean companies as they can easily absorb this hike it. This will end up hurting Indian competitiveness more than the government imagines,” he said.

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