Question

a group of company in India wishes to input high quality ACs from South Korea but have to pay use import taxes on them which make the AC very expensive leading to the dealing their sales. Ascertain role of import taxes in this situation

Answer 1

The role of import tax in this situation is acting as a trade barrier.

Trade barrier refers to the imposition of tax on the import of goods from foreign countries. The Indian government has put barriers to foreign trade and foreign investment after independence.
The objectives were :

1. To protect the domestic producers from the following competition.

2. To provide opportunity to new industries to develop their position in the market.

3. To control the quantity of imports in the country.

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Answer 2

the import tax is acting as a Trade barrier.
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