Mumbai, Aug. 29
THE Reserve Bank of India has suggested a single uniform tariff rate of 10 per cent for all imports.
According to RBI's annual report, released on Monday, the country's external environment including foreign exchange reserves allows for rationalisation of tariffs with respect to imports.
The report said that various reforms in the trade policy regime have stepped up productivity gains and also improved competitiveness and access to overseas markets. Hence, the environment is conducive for a move towards adopting a uniform rate.
According to the apex bank, the move towards a uniform rate will help simplify customs procedures in line with the best global practices and improve competition as well as exports.
Analysts say that the suggestion of a single uniform rate of 10 per cent would exclude certain sensitive agricultural commodities where the duty is high in order to protect the interests of Indian farmers. The import duty on palm oil, for instance, is 80 per cent while for wheat it is 50 per cent.
The central bank's report says that the India's merchandise exports have risen at a rate of over 20 per cent a year in dollar terms during 2002-05. However, the country's current account balance has moved from a surplus of 1.7 per cent of GDP in 2003-04 to a deficit of 0.9 per cent in 2004-05, mainly due to a substantial rise in imports.
As per the report, since the capital flows into the country were in excess of the current account deficit, the overall balance of payments remained comfortable. The country's foreign exchange reserves (excluding valuation effects) increased by $26.2 billion during 2004-05 which, according to the central bank, can finance about 14 months of imports.
While the exports, at $79.3 billion grew by 24.1 per cent, imports at $107.1 billion grew by 37 per cent in 2004-05.
Oil imports at $29.8 billion have shot up by 45.1 per cent in 2004-05, mainly on account of the surge in international crude oil prices in volume terms. However, in terms of growth rate, oil imports slowed to 5.5 per cent in 2004-05 from 10.6 per cent in 2003-04. Non-oil imports excluding gold and silver witnessed a substantial increase at 61.1 per cent during April-May 2005, led by imports of mainly industrial units.