‘Protection today hurts a lot more than in the past’

“I still don’t see that we will roll back protection with the present government, it doesn’t look to me like there is any constituency within the government to roll back the tariff protection,” Panagariya said, noting that one opening that had happened was the Centre’s push for FTAs.

Arvind Panagariya

Former Vice Chairman of NITI Aayog Arvind Panagariya on Friday said import duties played a role in keeping Indian firms out of important regional supply chains as inputs crossed multiple borders with large firms specialising in a few activities. Panagariya, however, noted that he did not see any intention in the government to roll back trade protections.

“Protection today hurts you a lot more today than it did in the past because inputs have to cross many borders … So even if it’s 5 per cent direct (tariff) at the border, each time it crosses any country from one to the other, 5 per cent gets added,” he said, noting that most major supply chains in Asia were in countries with free trade agreements (FTAs) with goods moving without barriers.

“I still don’t see that we will roll back protection with the present government, it doesn’t look to me like there is any constituency within the government to roll back the tariff protection,” Panagariya said, noting that one opening that had happened was the Centre’s push for FTAs.