Taxes and trade

India is losing export opportunities

One of the few successes within India in terms of competitiveness and exports has been its automobile industry. Yet, as the managing director of Volkswagen India, Gurpratap Boparai, pointed out this week, aspects of India’s internal duty structure on cars have restricted the growth of the export market. In particular, the multi-tier nature of goods and services tax (GST) has distorted the market and, thus, the production capacity within the industry. The political decision to try and have a different structure for “affordable” and other goods — where “affordable” is often arbitrarily defined — is never a good idea. In