India: Commerce Ministry Assessing Impact Of Free Trade Pacts On Local Manufacturing

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The Department of Industrial Policy & Promotion (DIPP) is analysing the extent to which India's free trade agreements with Japan, South Korea and the ASEAN have distorted the import duty structure and how it could be corrected.

India Inc has asked the government to address the inverted duty structure under which import duties on finished products are higher than duties on inputs – in the forthcoming budget. "While this year's budget could make some changes in the import duty structure to correct some inversion, it has to be an ongoing exercise because the issue is complex," an official from the DIPP said. "Since it is not possible for India to increase import duties on finished products because it has made a commitment to its FTA partners to keep those at low levels, the only way in which inversion can be addressed is by lowering duties on raw materials," a commerce department official said. 

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