Sitharaman’s tariff increases are based on a new economic gambit
Higher import barriers can attract foreign investment from ‘tariff jumping’ investors keen on doing business in the country
The Union budget, presented by finance minister Nirmala Sitharaman on 1 February, received generally good marks from commentators—with the exception of a new round of tariff increases, which has been widely criticized. As a trade economist steeped in the doctrine of gains from trade, I must confess that my first instinct too was to criticize the changes. Indeed, your columnist has been sharply critical of the government’s latter-day return to tariff protection in more than one recent column.