Cars: Why these high tariffs?

Commenting on the competitiveness of Indian automobile sector, Business Standard writes

So it bears asking why the industry and government want to continue with the current high level of import protection—with basic duties of 100 per cent for cars, and total duties going up in some cases to the region of 160 per cent. Only sin products like alcohol and cigarettes, apart from sensitive agricultural items, continue to attract very high import tariffs—and there is no reason why a healthy automobile sector should enjoy the same privilege. After all, the basic duty on most inputs for the industry vary from 5 per cent to 12.5 per cent, Indian factory labour costs less than it does in most other countries, and productivity levels are now comparable with the best in the world. So much so that Maruti Udyog in India threatens to get bigger than its parent company, Suzuki Motors, in its home market of Japan, and contributes an increasingly sizeable chunk of the latter’s profits. With so much going in its favour, India’s automobile industry does not need to hide behind protectionist curtains.

The story of the high tariffs goes back to the issue of low-cost imports coming in from China, amid allegations that their costing was not transparent and that Indian industry was therefore at a disadvantage. When leading lights of the automobile industry lobbied with the then finance minister, Yashwant Sinha, they were persuasive enough to get exactly what they wanted.