Tariff uncertainty

Tinkering with rates will put off investment and hurt exports

Another Union Budget has deepened the turn towards protectionism, which began a few years ago. Union Finance Minister Nirmala Sitharaman said in her Budget speech that the Customs duty policy “should have the twin objectives of promoting domestic manufacturing and helping India get on to the global value chain”. But these twin objectives run directly counter to each other. Promoting domestic manufacturing through trade policy inevitably leads to dissociation from the modern system of just-in-time manufacturing, which demands flexibility and access. In spite of the ample evidence that these two objectives cannot be simultaneously achieved, the finance ministry persists in