an export tariff is a tax placed on

8/9/2019 Anexporttariffis a tax placed on

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Introduction

The policies countries use to restrict trade

are called Barriers to Trade.

Tariffis the most common.

Tax imposed on a good as it crosses a

national boundary.

Use of tariffs has been declining

recently due to internationalnegotiations conducted under the WTO

(successor to GATT).

A tax on imported goods and services.


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IMPORTANCE

Tariffs are duties or list of that the

government puts on exports and imports.

Tariffs are important because they help toregulate the products flowing in and out of

a country. To protect fledgling domestic industries

from foreign competition. To protect aging and inefficient domestic

industries from foreign competition.


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Areas of concern

India has reduced tariffs to bring them tobound levels. Even lower for a large numberof commodities as part of the reformsprocess. Now, India committed to reduce

tariffs to bring in line with South East Asiancountries by 2007. We are not in a position toreduce tariffs substantially to the extentsuggested by developed countries since

Customs duties important source of revenuefor developing countries like India.

The industrial sector faces severalconstraints-some protection warranted for

specific industries.


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Tariff Structure in India

Given importance attached to reduction of tariffs,we look at tariff structure in India and alternativestrategy for tariff negotiations.

Tariff structure in India highly complex in early1990s. With initiation of reforms, substantialreduction in customs duty rates. Simple averageduty rates declined from 128% in 1991-92 to

22.4% as per interim budget for the year 2004-05. Weighted average duty rates declined from72.5% to 18.2% during this period, as in table.


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Tariff Structure in India(continued)

While average duty rates have declined,

still large number of tariff rates prevalent

ranging from zero per cent to over 150%during 2004-05.

Co-efficient of variation (CV) around

average duty rates quite high.


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Types of Tariffs

Specific Tariff A tariff specified as an amount of money per unit of

the good sold. (Easy to calculate, but does notadjust to price changes.)

Ad Valorem Tariff A tariff calculated as a percentage of the value of

the good or service. (More difficult to calculate.)

Combination Tariff A tariff that combines an ad valorem tariff and a

specific tariff.


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Six Types of Non-Tariff Barriers

(2) Customs and Administrative Entry Procedures:1. Valuation systems

2. Antidumping practices3. Tariff classifications4. Documentation requirements5. Fees

(1) Specific Limitations on Trade:1. Quotas2. Import Licensing requirements3. Proportion restrictions of foreign to

domestic goods (local content requirements)4. Minimum import price limits5. Embargoes


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(3) Standards:1. Standard disparities2. Intergovernmental acceptances of testing

methods and standards3. Packaging, labeling, and marking

(4) Government Participation in Trade:1. Government procurement policies

2. Export subsidies3. Countervailing duties4. Domestic assistance programs


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(5) Charges on imports:

1. Prior import deposit subsidies2. Administrative fees3. Special supplementary duties4. Import credit discriminations5. Variable levies

6. Border taxes

(6) Others:

1. Voluntary export restraints2. Orderly marketing agreements


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IMPACTS OF TARRIFS

Tariffs are a boon to domestic producers whonow facereduced competition in their home market.

The reduced competition causes prices to rise.The sales of domestic producers should alsorise, all else being equal.

The increased

production and price causes domestic producersto hire more workers which causesconsumer spending to rise.

The tariffs also increase government revenuesthat can be used to the benefit of the economy.


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The Impact of Tariff (Tax) Barriers

Tariff Barriers tend to Increase:1. Inflationary pressures

2. Special interests privileges

3. Government control and political

considerations in economic matters

4. The number of tariffs they beget via

reciprocity


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Tariff Barriers tend to Weaken:

1. Balance-of-payments positions

2. Supply-and-demand patterns

3. International relations (they can starttrade wars)


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Tariff Barriers tend to Restrict:

1. Manufacturer supply sources

2. Choices available to consumers

3. Competition


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The export tariffs inIndia aims at doubling India'sexport and generate additional employment

complimenting the stupendous growth of Indian

economy. The export tariffs in India is formulated

complimenting the export import policy of India whichagain forms a part of the India's foreign trade policy.

The current export tariffs in India as per the EXIM

policy of India covers exports tariff rates for different

goods and services. The export tariffs in India as perthe Indian classification on tariff items which strictly

conforms to the "Harmonized Commodity Description

and Coding System".

Export tariffs in India


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Export tariffs in India (CONTI)

The Indian export tariff saw a quantumincrement of Indian exports to Pakistan, UAEand Italy in the first quarter of the current fiscal

year. Today, India ranks second in themanufacture of small passenger car segment. Itis the worlds largest producer of genericpharmaceutical and its Information Technologysector is registering three figure growth

consistently. As a result of which India hasbecome the global export hub for goods andservices.


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Tariff Structure and

Imports(continued)

Looking at import elasticities, found elasticityless than (-)1.0 for 13 commodity groups outof 99. This suggests that reduction in tariff would result in higher percentage increase in

import ratio for these commodities.

These items included animal/vegetable fat,sugars, cocoa, vegetable and fruitpreparations, tobacco items, carpets and

textile, floor coverings, apparels and clothing,human hair, feathers, ships and boats,furniture, beddings, toys, sports items

Other sectors elasticity found to be between

(-)1.0 and zero and even positive for few.


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Some Final Observations

Large tariff reductions of essential importitems like cereals, dairy products, edible oilsand other agricultural products with lowelasticity would benefit the consumers but

would be unacceptable on considerations ofnumber of people dependent on these itemsfor their livelihood and implications ondomestic production. These sensitive itemsare also heavily subsidised by DCs.

On the other hand, drastic tariff reductions onitems with high import elasticity could lead tosubstantial surge in imports and affect thedomestic economy adversely.


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Some Final Observations (continued)

It is imperative that tariff rates need to be

rationalised and more importantly made

more uniform and transparent.

While undertaking reduction commitments,

need to carefully identify sectors that could

be subjected to greater tariff reductions

than others.


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Some Final Observations (continued)

At the same time, items of export interest

with high import content need separate

treatment.

Delicate balance of various considerations

required to determine tariff reductions

such that have minimal detrimental impact

on economy.


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Thank YouThank YouThank You

PROJECT BY:

PIYUSH RATHOD -62

HARSHIT BAFNA -06

THANK YOU

an export tariff is a tax placed on

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