India has made significant strides in reducing tariffs over the years, bringing them in line with global averages. However, domestic industries continue to lobby for increased duties, raising questions about the underlying reasons for such demands, said Amardeep Singh Bhatia, Secretary of the Department for Promotion of Industry and Internal Trade (DPIIT), on Wednesday.
Speaking at the CII Global Policy Forum 2024, Bhatia highlighted the progress India has achieved in integrating with global supply chains through tariff reductions. “The weighted tariff has come down substantially, almost aligning with the world average,” he said. “Yet, domestic industries persist in urging higher duties, which warrants examination. Why are we not competitive enough?”
Balancing tariffs and competitiveness
Tariff reductions, particularly on raw materials, have been instrumental in fostering domestic manufacturing, generating employment, and boosting exports. Sectors such as electronics, precious metals, and chemicals have notably benefited from these cuts. India has also pursued free trade agreements with various countries to further enhance export opportunities.
Despite these measures, the calls for higher tariffs suggest underlying challenges. Bhatia’s remarks underscore the need for a deeper understanding of domestic industries’ competitiveness and the factors driving these requests.
Vision for a developed india
The DPIIT Secretary reiterated the government’s commitment to achieving the ambitious targets of “Viksit Bharat 2047,” which envision India as a developed nation by its centenary of independence. Enhanced private sector investment, particularly in clean energy, is expected to play a pivotal role in this transformation.
Efforts to improve the ease of doing business and industrial infrastructure are central to the government’s strategy. “A lot has been done in the industrial infrastructure space. There are more than 4,000 industrial parks in the country,” Bhatia said. He also commended states like Tamil Nadu for adopting innovative practices, such as land pooling systems, to increase the availability of industrial land.
Addressing ground-level challenges
Rakesh Bharti Mittal, Vice Chairman of Bharti Enterprises, raised concerns about the high cost of doing business in India. He stressed the need for more concerted efforts at the state level, as practical challenges often hinder progress despite policy reforms.
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Bhatia acknowledged these concerns, pointing to the Business Reforms Action Plan (BRAP) as a mechanism for assessing states’ performance in promoting ease of doing business. “There are about 280 reform actions identified under BRAP. We also share a bucket of good practices with all states,” he said, citing Odisha and Telangana as examples of states with effective single-window clearance systems.
Collaborative solutions for growth
Bhatia emphasised the importance of consultations with states to address land availability and other bottlenecks. Some states, he noted, have implemented “very good” systems for pooling and making land available for industrial purposes.
These collaborative efforts are aimed at creating a conducive environment for businesses, ensuring that India’s industries are not only competitive domestically but also on the global stage.
A broader perspective
India’s tariff policies and infrastructure development initiatives are part of a broader strategy to position the country as a global manufacturing and export hub. However, the persistent demands for higher duties indicate the need for a closer look at structural inefficiencies and sector-specific challenges.
By fostering dialogue between stakeholders and implementing targeted reforms, the government aims to strike a balance between protecting domestic industries and promoting global competitiveness. As India moves toward its vision for 2047, addressing these complexities will be key to unlocking the nation’s full economic potential.
