Friday, September 28, 2018

Why are we importing beads?

A few days back the Indian government increased customs duty on 19 imported goods. However, these will not make much difference in our import bill nor will they help to stop the rupee from falling against the dollar, wrote H Jethmalani and P Pengonda. Higher tariffs will reduce import by only $500 million which is 0.1% of our total imports and a "2-10% increase in tariffs on $10-15 billion of imports" will not support the Indian currency. Sadly, we, the citizens of India are used to very high taxes which keep changing at the whim of whichever political party is in power. What is really shocking is to see what we are importing. We are importing common items made of plastic, like boxes, bottles, household items of plastic, travel bags, beads and bangles. Why, when we have the largest oil refinery in the world at Jamnagar which exports to Western countries and produces "polypropylene, which is used to create such products as fibers, films and household plastic goods? And, if we are exporting refined gasoline to the US why are we importing Aviation Turbine Fuel? "Brokerage firm CLSA India has said that Voltas Ltd's joint venture with Turkey-based Arcelik AS would be hurt as the appliances are 100% imported and their domestic factory will likely take a year to start." Voltas is part of the Tata group, was set up in 1954 and has been selling air conditioners since then. So when we think we are buying Indian we are actually buying products made in Turkey. "Another casualty could be Havells India Ltd since it currently imports 70% of its subsidiary Lloyds' requirement, although the company has the option to shift to domestic manufacturing, said CLSA India." Havells electrical products are in extensive domestic use. Its electric wires, switches, circuit breakers, ceiling fans and water heaters are used by millions. Producing in India where labor costs should be a fraction of those in Europe, and lesser transport costs, should make it much more lucrative to produce in India. India has many companies that make tyres for trucks, cars and two-wheelers. Cultivation of rubber trees is concentrated in South India which produce around 700,000 tons of rubber annually. The industry earns around Rs 500 billion from exports and yet we are importing tyres. Mystery. The rupee has slipped because it was overvalued and the reason for that is that our retail inflation is always higher than that of Western countries, especially the US. Even now it maybe overvalued, according to some. If we have to import the commonest goods from abroad it is no wonder that the rupee is losing value. Good to know that we are also importing beads which were used for trade hundreds of years ago. That is real progress.  

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