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Low tariffs, high protection

Even relatively moderate tariffs of around 20 per cent can be highly protective and distortionary

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Trade Wars  |  Technology  |  Tariff

Shankar Acharya 

Shankar Acharya

In a recent column (Wanted: Better trade policies, August 9, 2018), I lamented that the revival of higher protective customs tariffs over the past year (especially in the February 2018 Union budget and several times since) has been a damaging reversal of the cross-party reform commitment to reducing our tariffs to “East Asian levels” that had prevailed since 1991. I pointed out that such tariffs raise domestic costs and prices, hurt exports, foster inefficiency, encourage further hikes, invite retaliation and generally weaken the development of an efficient and competitive manufacturing sector. They hurt trade and do little to reduce large trade and current account deficits.

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First Published: Wed, October 10 2018. 22:53 IST
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