At a time when domestic industry is facing unprecedented crisis in the wake of Covid-19 pandemic, Niti Aayog member V K Saraswat hasfavoured imposing a border adjustment tax (BAT) on imports to provide a level-playing field to domestic industries.
He has also stressed on the need to identify reforms that can be immediately undertaken. Speaking at a virtual event organised by the PHD Chamber of Commerce, he said, “US-China trade tensions are currently at historic high levels. In the post COVID world, it is expected to rise further… so first we have to do a border adjustment tax to provide the domestic industry a level-playing field vis-a-vis imports.”
According to Saraswat, various taxes like electricity duty, mandi tax, clean energy cess, royalty etc lead to escalation of price.
He said that “such taxes which are imposed on domestic goods, give them a price advantage in India.”
On Prime Minister Narendra Modi’s Atmanirbhar Bharat vision, Saraswat, a former chief of the Defence Research and Development Organisation, said advocating self-reliance should not imply that India will embrace isolationist policies.
He added: “I think many people think that we are going back to the old era. They are wrong. We have to be global but we have to have a supply chain which is more local,” Saraswat said India is over dependent on everything including ventilators.
“We have to invest in infrastructure. We must minimise our dependence on others for raw material and semi-finished goods,” he pointed out. Saraswat emphasised on the need to look beyond banks for infrastructure funding.
BAT is a duty that is proposed to be imposed on imported goods in addition to the customs levy that gets charged at the port of entry.
The Indian industry has been complaining to the government about domestic taxes like electricity duty, duties on fuel, clean energy cess, mandi tax, royalties, biodiversity fees that get charged on domestically produced goods as these duties get embedded into the product.
But many imported goods do not get loaded with such levies in their respective country of origin and this gives such products price advantage in the Indian market.
Adding to these strains is the stress caused by coronavirus. Top priority should be given to revive Indian trade and more steps are needed on this front.