By Former Indian Ambassador and Director General of Jadeja Motwani Institute for American Studies
There is a widespread but fallacious perception that India’s tariffs are inordinately high. There are subjective factors when it comes to a country like livability, public courtesy, or even how foreigners are welcomed. But tariffs are quantifiable and there should really be no place for subjectivity. So, let us consider the facts in the case.
Before we do that, however, it might be useful for the average reader to know as to what function tariffs perform in a low-income developing country like India, as opposed to say, a high-income developed country like the United States of America. Traditionally, low-income developing countries use tariffs for two reasons: one, to protect their domestic industry and two, to gain revenue from it. Protection of domestic industry is an accepted argument by economists all over the world, especially if the industry is an infant one and the country needs to develop an industrial base. Then, there is the revenue gaining function, which is illustrative of a country’s duties on alcohol or luxury motorcycles, for instance.