Will Protectionism Help Govt’s ‘Make in India’ Plan?

Govt’s bid  to hike tariffs on various goods, especially  industrial supplies, to boost local production may impact  the domestic industries using them  as inputs

Nirmala Sitharaman made a clear embrace of protectionism in her maiden Union Budget. The list of items on which tariffs have been hiked or introduced is far longer than the list of tariff reductions. These tariff hikes, which are part of a broader push towards protectionism and promoting ‘Make in India’, will have important implications for Indian industry and the economy.

For a start, because of these tariffs, the government expects a net revenue gain of ₹25,000 crore in 2019-20. It also hopes to encourage domestic manufacturing in the process.

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In total, Mint’s analysis of tariff proposals in the budget, suggests that around US$10.6 billion imports would face ‘protectionist’ tariff hikes. In other words, the items slapped with tariff hikes – excluding gold, silver and petroleum – accounted for US$10.6 billion dollars of imports in 2018-19.

Gold and silver are excluded from the analysis because unlike other items, duty hikes are primarily motivated by increasing the government’s revenue. Similarly, tariffs on the petroleum sector have more to do with bringing parity with domestic taxes rather than protectionism.

Source: Livemint

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