Bangladesh is next with an average applied tariff rate of 21.9 per cent. It is followed by Maldives with 21.1 per cent, says the WTO's annual report for 2003.

It said the high tariffs in developing and least developed countries served two purposes -- protecting domestic industry from foreign competition and as a major revenue generating source.

"It follows that tariff reforms can have serious revenue implications in such countries, and reductions in the average tariff depend heavily on tax reforms aimed at reducing their reliance on border taxes for revenues," the report said.

India topped Brazil, Bangladesh and the South African Customs Union in the list of most favoured nations tariff rates for the 21 product categories.

The report pointed out that in the case of fats and oils, the average tariff in India was as high as over 65 per cent in 2001-02. In all, for the 21 product categories barring footwear and headgear, even Bangladesh had lower average tariffs than India.

The WTO has, however, said in developing countries like India, tariff peaks were applied only to a few items. In the case of India, domestic tariff peak duties were three times or more than the average and covered 1.3 per cent of the items in 2001-02 and 0.2 per cent in 1997-98.

The report said the average applied tariff rate of duties in India stood at 32.3 per cent in 2001-02, with the average rate for agricultural products estimated at 41.7 per cent.

It has drawn attention to the fact that developed countries with low average tariffs resort to tariff peaks in sectors like agriculture, footwear and textiles, which are of interest to developing countries like India.

This is particularly the case in the Quad group, comprising the US, the European Union, Japan and Canada. The WTO said the group warranted particular attention because its tariffs could affect developing and least developed countries.

The annual report revealed that domestic tariff peaks (items for which duty is three times the average applied tariff rate) were highest in Japan, where 6 per cent of the tariff lines in 2002 were in the category.

In the case of the US, it was 5 per cent in 2001. For the EU and Canada in 2002, the figures were 5.2 per cent and 1.6 per cent, respectively. Canada topped the number of international tariff peak items (duties 15 times higher than the average applied tariff rate) with 9.8 per cent of its tariff lines in the category.

Among the Quad group, Canada had the highest most favoured nations tariff rates for most of the 21 product categories.