'No longer looking at custom duty as revenue source in FTA talks'

INDIA IS LIKELY to lower tariffs on a range of items including high tariff products such as cars, whiskey and machinery items for the first time under the free trade agreements (FTAS) with developed economies and is moving away from looking at tariffs as a source of revenue during negotiations, a government official said.

- RAVI DUTTA MISHRA

• INDIA IS NEGOTIATING FTAS WITH UK, EU, AUSTRALIA AND OMAN

This comes amid internal consultations between the finance ministry and the commerce ministry to assess the impact of the major duty reductions that could be announced as part of the FTAS.

India is currently negotiating FTAs with the UK, the European Union, Australia and Oman where India could lower duties on goods and services sharply.

"Things are moving in the direction where tariffs cannot be a source of revenue. Tariffs contribute to revenue but a free trade agreement cannot be accessed on the basis of tariffs because when free movement of goods and services happen, the overall economic growth is immense. Revenue will be a minor part of the whole story," the official said.

Tariffs are customs duties on goods imported into a country. New Delhi has the highest import duty compared to most major economies with an average Most Favored Nation (MFN) rate of 18 per cent, about twice the global average, according to the WTO Tariff Profile database. In trade parlance, the most-favorednation clause requires WTO members to offer the same trade terms to all trading partners.