Overhaul of import tariffs, customs to cut trade costs: GTRI, Pg15

Key Highlights:

• GTRI recommends overhauling India's import tariff structure and customs to cut trade costs.
• The proposal includes moving towards zero duty on most industrial raw materials and key intermediates.
• A low standard duty of around 5% is suggested on finished industrial goods over the next three years.
• India's merchandise trade has crossed $1.16 trillion, with nearly 29% of GDP flowing through customs.

Detailed Insights:

• The current tariff structure includes cesses, surcharges, and trade remedies, complicating the effective tariff rates.
• Rationalizing extreme tariffs, like the 150% duty on alcohol, is crucial to discourage evasion and increase revenue.
• Tariff reforms should focus on total import duty rather than just the basic customs duty to provide a clearer picture.
• Around 90% of import value comes from less than 10% of tariff lines, while the bottom 60% generate under 3% of customs revenue.

Key Concepts Involved:

• Tariff: A tax imposed by a government on goods and services imported from other countries.
• Customs: The government service that administers and collects duties on imported goods.
• Gross Domestic Product (GDP): The total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period.