The Death of Import Tax - Why it doesnt matter anymore

Day 1,213, 02:10 • Published in India India • by Indian Government Bank

Lately there has been a lot of commotion in eIndia around the import taxes with company owners putting a huge amount of pressure on the govt to raise those taxes from 1% to protect the local industries from cheaper products from foreign companies with higher resource bonuses

The eIndian govt till now had been resisting the pressure to ensure that the prices stay low for the consumer, despite certain rebellious proposals in last few months to push up the import tax.

In the current term, the CP Maverick10 Dodge Knight agreed to experiment with the import taxes and study their impact on the economy, much to the chargin of our ex MoF Devoid.

As a first step there was a recent successful proposal to raise Iron import tax to 33% by Sharry, a long time supporter of higher import taxes and protectionist tax regime.

But the recent economy changes by the admins has more or less killed the benefit the company owners want to derive from import taxes. To understand it better, lets look at why some factions want a higher import tax

1. To deter the foreign supply into the local market and hence decrease competition and increase profits and sales for local businesses. This is somewhat understandable and for a small economy like eIndia, may be even good in short term

2. Cartelization and monopolization of market. This is a more malignant form of the previous point and results from an uncontrolled implementation of point 1. And as a country moves into a protectionist regime by implementing point 1, reaching point 2 is just a matter of time

However, with the new changes, both the above points have been rendered impotent.

1. If I am a company owner, in lets say USA who wawnts to sell into India, and am being detered by higher import taxes, all i need to do is to dump a lot of my product into my org with an indian license, buy it a ticket from USA to India and get it into India and sell locally. Voilla.. No Import Tax

2. If I am govt bothered about point 2 and I see local company owners making merry by monopolizing the market and jacking up prices because of absence of competition, I just need to get one of my orgs into a country with cheap product, buy a large quantiry locally, donate it to a citizen in eIndia and dump the product at the ceiling price i want to maintain in eIndia. This will force all the company owners in eIndia to sell below that price

Problem solved


Hence I believe, the changes in Import taxes have been rendered useless by the recent implementations by the admins..

As they say, change is the only constant

Cheers and happy gaming

Graf