India Resorts to Import Tariffs to Protect Domestic Producers

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We could be forgiven from all the coverage in the press that US primary manufacturers have a singular campaign against Chinese imports and are waging a one nation war against what they perceive as subsidized or cheap imports. In fact, China’s adopted role as manufacturer to the world consistently brings it into conflict with many countries, including other developing nations. In an article in the FT the same concerns, actions and justifications are being expounded in India as the US. Even as the Indian economy comes out of the global recession with Index of Industrial Production (IIP) growth rates just 2% below the highs of last year, the country is seeking to impose sweeping import tariffs on Chinese toys and other goods. The ministry claims general imports from China rose 55% to $27bn (âšÂ¬19.3bn, £16.4bn) in the financial year to April 2008 and again in the year just ended but particularly hit the toy industry hard taking a majority of the $2.5bn market this year. The dispute has been rumbling along for months with China in return threatening to take India to the WTO.

But many see the toy dispute as the proverbial shot across the bows, India has many other items on its list of imports from China it wants to limit, not least of which steel for India’s fast growing car industry according to Business Week. Imports of HRC have surged 300% according to India’s Director of Foreign Trade quoted in the Times of India, no anti dumping cases have been imposed yet but as with many overseas markets applying import tariffs on India steel we can expect the domestic Indian steel industry to also call for tariffs soon.

Nor is steel alone. In March, India applied 35% duty rates on Chinese aluminum sheets and 22% rates on aluminum foils, mostly at the request of domestic producer Hindalco which already enjoys 55% of the domestic foil market and 70% of the flat rolled market according to domain-b a business website.

Protectionism was one of the first fears voiced by administrators when the credit crunch hit last year and though on the whole lawmakers across the trading world have done a pretty good job of resisting the calls for tariffs to be applied to imports there are exceptions and India appears one of them.

–Stuart Burns

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