Hasten tariff reforms, urges ICRIER

Economic policy think tank ICRIER on Tuesday said that India had the third highest customs duty rates after Cambodia and Pakistan amongst 122 nations and suggested that the government hasten tax reforms by lowering peak customs duties to ensure export competitiveness of domestic industry.

Making a case for lowering of peak customs duty from prevailing 30 per cent to 10 per cent by 2006-07, the Indian Council for Research on International Economic Relations said in a policy brief on customs tariff reform that the government's proposed tariff structure does not achieve much reduction relative to competitive countries.

"In this globalised era export-oriented foreign direct investment depends on country's tariff levels relative to those of competing countries particularly those in East and South East Asia," CEO and director Arvind Virmani said in the paper.

As compared to India's peak customs duty of 30 per cent, Pakistan has rates of 46.5 per cent, while Cambodia has 35 per cent.

Emerging economies like Russia have rates of 13.9 per cent while Czech Republic is at 6.8 per cent, it added.

"It is therefore imperative to go beyond the existing commitments and bring peak rates to East Asian levels during the current decade. This will give sufficient time for industry and agriculture to adjust these changes and for government to ensure that domestic control and bureaucratic constraints are eliminated," it said.