Introduction
A tariff is a sovereign-state import or export tax. It is a form of foreign trade regulation and a policy that promotes or protects the domestic industry by taxing foreign products. Countries have historically used these as a source of income. Today, import and export quotas are among the most commonly used instruments of protectionism.
Understanding Tariffs
Tariffs can be fixed (a fixed sum per unit of imported products or a percentage of the price) or variable (the amount varies by price). Consumers are less likely to purchase import-taxed products because they are expensive. Instead, they plan to buy local products, thereby boosting the economy while tariffs offer an opportunity to expand demand and replace imports with domestic goods.
Importance of Tariffs
Tariffs are intended to reduce global market pressures and the trade deficit. Historically, they have been justified as a way of preserving the infant industries and enabling industrialization through import substitution. Tariffs may also be used to control the artificially low priced imported goods, due to dumping, export subsidies, or currency manipulation.
Tariffs in India
The general application tariff structure consists of a basic customs duty, an additional duty, a special additional duty, and a health cess. In 2018, the Indian Government launched its India Trade Portal (http:/indiantradeportal.in/) in partnership with the Federation of Indian Exporters (FIEO). It published applicable tariffs and other customs duty rates applicable to imports. The India Trade Portal provides Harmonized Program codes with information on the latest tariff and duty rates.
From 2017, India imposed tariffs on many electronic goods, and non-essential things as part of the promotion of its Make in India initiative to boost and protect domestic manufacturing and combat current account deficits.
This includes products, which are imported from countries, such as China and South Korea. For example, India's national solar energy programme, requiring the use of Indian-made solar cells, favours domestic producers.
