Tariff reform - trade liberalisation under wto, Macroeconomics

Tariff Reform:

India's customs tariff rates have been declining since 1991. The "peak"  rate came down from 150 percent in 1991-92 to  40 percent  in 1997-98. The downward momentum was reversed the next year with the .imposition of a surcharge. This momentum resumed with the reduction of the "peak"  rate to 35 percent in 2001 -02 and 30  percent in 2002-03. "Peak"  rate (applicable to all manufactured  and mineral products except alcoholic  beverages  and automobiles) was reduced to 20 percent  at the end of 2003-04. It  is therefore quite evident that India has drastically reduced the level of tariff, particularly industrial  tariff, in the period since 1991. Many research studies have argued that this reduction should not, however, be attributed to India's commitment under WTO because the tariff rates have in most cases been brought down to a level well below  the rates committed. It  seems reasonable  to argue that  the tariff  reform undertaken by India in the last 14  years was mostly done at India's own initiative (induced by the benefits expected from such reforms) and had little  to do with India's commitment under WTO. 

Similarly many researchers have studied the impact of India's trade reforms, particularly tariff reforms, on domestic industry. It appears that tariff reforms did not lead  to  a general  surge  in  imports of  industrial  goods adversely affecting domestic  industry. On  the  other hand,  there  is  some evidence  to indicate that  tariff reform contributed  to  higher industrial productivity and better export performance. But, these effects however, cannot be ascribed to India's tariff commitments  under WTO, since the tariff  reform took place largely independent of the WTO.  


Posted Date: 11/9/2012 5:34:23 AM | Location : United States

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