Tariff and Non Tariff Barrier in India

TARIFF AND NON TARIFF BARRIER IN
INDIA
AISHWARYA KENGAR
218129
TYBMS(MKT)
INTRODUCTION
All nations impose some restrictions in the form of tariff (i.e., import tariff and export tariff) and
non-tariff barriers (i.e., import quota, dumping, international cartels and export subsidies) on the free flow
of international trade. Since these restrictions and regulations deal with the nation’s trade or commerce,
they are generally known as trade or commercial policy. Trade restrictions are invariably rationalize in
terms of national welfare. However, practically these are advocated by those special groups in the nations
that stand to benefit from such restrictions.
MEANING OF TARIFF BARRIERS
Tariff is a tax/import duty on the goods which are being imported from aboard. Tariff are in the form
of custom duties (imposed by importing countries) and operation through price mechanism. They raise the
prices of imported goods and thereby restrict their imports Tariffs are imposed by the government on
imports and not on exports as all countries are interested in export promotion.
TARIFF BARRIERS IN INDIA
Entry Requirements
With respect to entry requirements, India has divided goods that are new, those goods that are
secondhand, remanufactured, refurbished or reconditioned. India permits the imports of secondhand capital
goods by the end users without carrying an import license, provided the goods are undamaged for five
years. The country’s Foreign Trade Policy segregates remanufactured goods in a similar manner to the
secondhand products, without considering that the remanufactured goods have been restored to the original
working condition, meeting the technical and safety specification that is applied to the products made from
raw materials. Reconditioned computer spare parts can be imported only if an Indian Chartered Engineer
certifies that the equipment retains at least 80% of its life, while redeveloped computer parts from domestic
sources are not applicable for this requirement. Some of the problems that the stakeholders’ report includes
the excessive details that are needed in the license application, the quantity limitation that is set on the
specific part number and the long delays between the application and the grant of license.
Export Subsidies and Domestic Support
Several export subsidies and other domestic support have been provided to various industries to make
them globally competitive. Export earnings are exempted from taxes and the exporters are not liable for the
local manufacturing tax.
Testing, Labeling and Certification
The Indian Government has sorted out 109 commodities that that must be certified by the Bureau of
Indian Standards (BIS) and the National Standards body. Apart from this, the Food Safety and Standards
Authority of India, implemented under the Food Safety and Standards Act, 2006 laid down standards for
articles of food and regulating the manufacturing, processing, distribution, sale and import of food. These
regulations were brought in to make sure the quality of goods. Whereas, other countries use them as measures
to protect the goods. The export subsidies intend to displace exports from other countries into third country
markets, whereas the domestic support acts as a direct barrier to access the domestic market.
Service Barriers
The following are the services that include restrictions.
Insurance, Banking, Securities, Motion pictures, Accounting, Construction, Architecture, Engineering,
Retailing, Legal services, Express delivery services, Telecommunication.
The Indian Government has strong ownership in major service sectors like banking and insurance.
Foreign investments made in business in certain service sectors that include financial services and retail.
Foreign participation in professional services has also been restricted, and in the case of legal services, it is
prohibited entirely.
NON TARIFF BARRIERS IN INDIA
Any measures( other than tariff) introduced for restricting the entry of foreign goods can be treated as non
tariff barrier.
Import Licensing
The most common non-tariff barrier is the prohibition or restriction of goods that are imposed through
import licensing requirements. Certain products are subjected to licensing related trade barriers, although India
has eliminated its import licensing requirements for most consumer goods. The import licenses for
motorcycles are provided only to foreign nationals that permanently reside in India, working in India for
foreign firms that value more than 30% equity or to foreign nations that work at embassies and foreign
missions. Voluntary Export Restrains(VER)
These types of barriers are created by exporting countries rather than the importing one.
This restrains are usually levied on the request of importing countries

Quotas
Under this system the country fixes in advance, the limit of import quantity of a commodity that would
be permitted from various countries during given period.
1) Tariff Quota: certain specified quantity of imports allowed at duty fee or at a reduced rate of import duties
therefore tariff quota combines the features of the tariff as well as the quota.
2) Unilateral quota: The total import quantity is fixed without prior consultation with the exporting
countries.
3) Bilateral quota: Here quotas are fixed after negotiations between the quota fixing importing country and
exporting country.
4) Multi lateral quota: A group of countries can come together and fix quota for each country.
Product Standards: Here the importing country imposes standards for goods. If the standards are not met,
the goods are rejected
Domestic Content requirements: Governments impose DCR to boost domestic production.
Product Labeling: Certain countries insist on specific labeling of the product.
Packaging Requirement: Certain nations just insist on a particular type of packaging of goods.
Foreign Exchange Regulation: The importer has to ensure that adequate foreign exchange is available for
import of goods by obtaining a clearance from exchange control authorities prior to the concluding of
contract with the supplier
State Trading: In some countries like India, certain items are imported or exported only through canalizing
agencies like MMTT(minerals and metals trading cooperation of India)
DISTINCTION BETWEEN TARIFF AND NON
TARIFF BARRIERS

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TARIFF AND NON TARIFF BARRIER IN

Export Subsidies and Domestic Support

This restrains are usually levied on the request of importing countries

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