IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Protection and industrial structure in India

  • Aksoy, M. Ataman
  • Ettori, Francois M.
Registered author(s):

    Effective protection rates in India are so high and vary so greatly that anything short of low uniform tariffs and the complete elimination of quantitative restrictions would not make the industrial incentive scheme transparent, as it needs to be. The authors produce evidence to show that there is ample scope for reducing tariffs and quantitative restrictions and that most industries could coexist with much less protection than they now have. By eliminating all surcharges on inputs (tariffs on imported inputs, price differentials on local inputs, nondeductible excise taxes) - even without correcting for the effects of high investment costs - most projects (including import substitution projects) would earn from current international prices a positive profit margin on their marginal as well as full production costs. The proportion of projects with a positive profit margin would triple, from 20 to 63 percent. Among import-substituting projects that are not candidates for export under the present trade regime, under the proposed new regime half would be candidates for export if they would procure their inputs at international prices. Lower tariffs would fulfill their primary purpose more effectively: providing protection and incentive signals. The function of generating public revenues, another critical issue in India, should be fulfilled not through tariffs but through more efficient and protection-neutral instruments - in particular direct taxation (income tax) and nontariff indirect taxation (neutral excise taxes, MODVAT, and preferably the value-added tax on consumption).

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/1992/10/01/000009265_3961003102241/Rendered/PDF/multi0page.pdf
    Download Restriction: no

    Paper provided by The World Bank in its series Policy Research Working Paper Series with number 990.

    as
    in new window

    Length:
    Date of creation: 31 Oct 1992
    Date of revision:
    Handle: RePEc:wbk:wbrwps:990
    Contact details of provider: Postal: 1818 H Street, N.W., Washington, DC 20433
    Phone: (202) 477-1234
    Web page: http://www.worldbank.org/Email:


    More information through EDIRC

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as in new window
    1. Ettori, Francois, 1990. "The pervasive effects of high taxation of capital goods in India," Policy Research Working Paper Series 433, The World Bank.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:990. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.