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COMPUTER TRAINING INSTITUTE The BIS Education Group (BIS) is the brain child of Mr. Krishn Kumar Jha, Chairman of BIS Education Group.
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What is INVERTED DUTY STRUCTURE
Inverted duty structure is a situation where import duty on finished goods is low compared to the import duty on raw materials that are used in the production of such finished goods.
For example, suppose the tariff (import tax) on the import of steel is 10% and the tariff on the imports of iron ore which is used in the production of steel is 20%; this is a case of inverted duty structure.
When the import duty on raw materials is high, it will be more difficult to produce the concerned good domestically at a competitive price. Several industries depend on imported raw materials and components.
High tax on the raw materials compels them to raise price. On the other hand, foreign finished goods will be coming at a reduced price because of low tax advantage. In conclusion, manufactured goods by the domestic industry becomes noncompetitive against imported finished goods.
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