Fix inverted tariff structures to boost industrial growth in India
Correcting import-duty anomalies will attract foreign firms to set up assembly bases here and lift our global competitiveness
A steady decline in import tariff rates in manufacturing industries had been an important feature of India’s economic reforms during the 1990s and 2000s. The average import tariff rate was reduced from about 84% in 1990 to the lowest-ever level of 8.6% in 2010. Consequently, imports of goods plus services as a percentage of India’s gross domestic product (GDP), which is essentially a measure of import openness, steadily increased from 8.5% in 1991 to 30.6% in 2012. The period since 2010, however, witnessed a gradual increase in import tariff rates.