Amid criticism by West, India strongly defends its tariff walls

NEW DELHI: India has strongly rebuffed the criticism of its ‘high’ tariffs and liberal use of trade defence mechanism by the European Union, United States and some others. The World Trade Organision, or WTO, reviewed India’s trade policy on September 14-15.

"The US, EU and Australia criticised our tariffs stating that they were too high and there was a lot of water between our applied tariffs and bound tariffs," a government official told ET.

India has countered the charge, arguing that actions against cheap imports were legitimate and that the multilateral trade body had appreciated the tariff reduction process.

At the end of June 2010, India had imposed 205 anti-dumping duties. The average tariff imposed on all goods in 2009 was 12.9% against committed rate of 48.5%.

India’s frequently changing export policy, particularly in the case of farm goods exports, also received flak for contributing to uncertainties in the global commodities market.

India defended the frequent change in policy, saying they were needed to prevent possible shortages and spiralling of prices and also to cushion the country's poor against price volatility. Food inflation has been hovering around 9% for many months now.

Commerce secretary Rahul Khullar urged WTO members not to lose sight that the ultimate objective of the multilateral organisation was to promote growth, improve standard of living and increase employment, the official told ET.

The WTO reviews every country’s trade policy after four-five years, critically appraising attempts to open up the economy or imposition of trade restrictions. It is important for a country to be in a position to defend its policies to avoid being branded as one that resorts to unwarranted protectionist measures.

The WTO noted that India’s simple average tariff rate declined to 12% in 2010-11, from 15.1% in 2006-07. This decline is reflected in a decrease in both agricultural and industrial average tariffs. India’s bound tariff rate, or the ceiling levels committed at the WTO, is 48.5% of all good and 113.1% for farm goods.