The 'T' words.

"S&P Global Ratings...said several Asia-Pacific economies could face higher tariffs under the Trump administration, while India, South Korea and Thailand could be most vulnerable to trade retaliation." However, India and Japan are more domestically oriented economies and this could mitigate some of the effects of US tariffs. ET. Already, "India has reduced its tariff on bourbon whiskey from 150% to 100%" "a day after US President Donald Trump criticised India's 'unfair' tariffs on American goods, particularly in the alcohol sector." HT. That is lightning speed, indeed. Galvanized into action, "Negotiations for free trade agreements with the UK and the European Union (EU) are set to get a big push this week." "The UK is looking at significant cuts in import duties on goods such as whiskey, EVs, lamb meat, chocolate and certain confectionery items." NDTV. Talks with the EU are complicated by non-tariff barriers such as the CBAM. "A Carbon Border Adjustment Mechanism (CBAM) (also known as a Carbon Border Adjustment Tax, or CBAT) is a fee or tariff levied on imported goods based on the greenhouse gases emitted during their production." Brookings. The problem with reducing tariffs on imports is that goods produced in India will become relatively more expensive unless the government reduces taxes on Indian products as well. For instance, "Taxes are the biggest component of the cost of liquor in India." "The total tax burden on liquor can vary from state to state, but it is around 70-80% of the retail price." Zolvit. It means that taxes are 4 times, or 400%, of the total cost of production and retail. Passenger vehicles with up to 1500 cc engines are taxed at 45%, higher than 1500 cc are taxed at 48% and SUVs are taxed at 50%. SIAM. Goods and services tax (GST) is levied on everything Indians use for daily living. GST on products essential for health, such as fruits and umbrellas are taxed at 12%, toothpaste and soap are taxed at 18% while ACs and fridges, essential for survival in the searing summers of India, are taxed at 28%. cleratax.in. "Tariff does not protect any country and India needs to cut tariffs for its own good, irrespective of who tells India to do so, Niti Aayog CEO BVR Subramanyam said recently." TOI. Why now? Customs duties started increasing since the budget of 2018 (FE), apparently to help Prime Minister Narendra Modi's 'Make in India' initiative so as to create manufacturing jobs inside the country (wikipedia). It was supposed to increase the manufacturing sector to 25% of GDP, creating thousands of jobs, but, instead, manufacturing fell from 16.3% of GDP in 2014-15 to 14.3% in 2020-21 and then to 14.1% in 2023-24. "No major economy has grown 8-10% without opening up of market, and India should bring down tariff on industrial goods to 10%, Prof Arvind Panagariya said in January 2021." TOI. Did the Niti Aayog advise Mr Modi that his policy was wrong? "The Aayog's intellectual timidity has made it evade serious policy questions." "Several officials view the Aayog as the Union government's public relations and event management wing than a serious policy think tank," wrote Pramit Bhattacharya." HT. So Mr Subramanyam's sudden enthusiasm for lower tariffs could be a cover up for Mr Modi's timid surrender to Trump's demands. Pure public relations. And to protect the humongous salaries received by an army (niti.gov.in) of event managers? How servile.