India’s Enviable Position: Profit from Multinationals While Getting them to Build Locally

India Taj Majal.jpgThe fight to land on top in the transition of Electric Vehicles (EV) is a serious competition in all nations with a domestic car industry. With many domestic car manufacturers in America, the national budget could really benefit from increased tariffs, much like the ones the prior administration put into place. Take a look at India and how they have positioned themselves with 125% tariff.

In an article released recently by the Coalition for a Prosperous America, they go into depth on how India flexes ‘Tariff Water’ against Tesla and the overall enviable position held. Here is an excerpt from the article:

India’s enviable position: profit from multinationals while getting them to build locally

While American taxpayers are on the hook every time an automotive factory gets built here, consider that India’s use of tariff water is going to net the Indian treasury money while driving foreign investment. With a 125% tariff, imports are a mere trickle, arranged by the ultra-wealthy who simply must have a particular luxury model inaccessible to most. So the 125% tariff isn’t making any real money for India; it serves to force companies to manufacture locally. But if India does wind up lowering its tariff on EVs to 40% or 25% for a few years to allow Tesla and others to test demand locally while arranging localization, then the Indian treasury will see a substantial bump in government coffers. President Trump’s 25% China tariffs (which violated WTO rules because we’re bound at a 3.4% average) led to an almost $100 billion windfall for the U.S. Treasury while incentivizing divestment from China.

The Indian government’s decision won’t be without parochial political costs. Tata Motors, part of the giant Indian conglomerate and the largest passenger vehicle manufacturer in India, opposes any tariff reduction. India is a democracy, its politicians need to get elected, and Tata has a big microphone. But India, like most of the developing world, already made the mistake in the 20th century of trying to keep out all foreign competition. They were left with dreary, unproductive ‘national champions’ that failed to serve their market.

However, now in the 21st century, India and other developing countries marry effective tariff policy and foreign investment rules to ensure robust domestic market competition in both manufacturing and sales, enjoying the bountiful economic growth and prosperity that ensues.

Meanwhile, America stands by neutered, totally brainwashed by an obviously failed economic ideology that only benefits international capital. India freely and openly discusses and deploys tariffs to drive domestic manufacturing, while the word cannot even be uttered by the vast majority of American political leaders.

To read the full article by Charles Benoit, CPA Trade Counsel, click here.

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