The correlation between exports and economic growth is evident, with India’s notable period of growth following the 1991 reforms witnessing a significant rise in exports, coinciding with a reduction in poverty levels. However, maintaining competitiveness in the global market necessitates keeping costs low, especially for imported inputs and raw materials. While import tariffs can hinder exports by making local exporters less competitive, policymakers have traditionally relied on duty drawbacks to promote exports. However, duty drawbacks face challenges regarding the amount recovered, delays in processing claims, and opacity in the application process. As an alternative, reducing tariffs on imports of equipment and parts can enhance the competitiveness of Indian exports and stimulate domestic ecosystems, as demonstrated by Vietnam’s success in scaling up exports through tariff reductions. This approach offers a viable strategy to foster export growth and drive economic development in India.
Examining the Role of Export Promotion and Tariff Policies in Economic Growth
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