Trade Barriers

The size and growth of the Indian market has made it an important trade partner. In recent years India has opened up its economy but there are still tariff and non-tariff barriers that slow down trade with other nations.

Compared with other nations, tariffs in India continue to be high. Currently, the average tariff is under 15%, excluding agricultural imports/exports, and duties for imported pharmaceutical products are taxed at 10%. In addition to these barriers, they also enforce other non-tariff barriers. These include import licensing, testing and certification for certain products, lengthy custom procedures, and other restrictions. There have also been significant concerns in regards to counterfeiting and piracy. Even though there has been improvement to this infrastructure there is still unease. This can become an issue for pharmaceutical companies if counterfeit drugs are replicated and sold.

Corruption exists in all nations so knowledge of how this affects the market in which you wish to enter is necessary. Of the five countries our company is interested in entering, Canada ranks the best as far as perception of corruption with a score of 8.7 out of 10. This is followed by Chile, Turkey, China, and India with a low score of 3.1.

Top five nations on the Corruption Perceptions Index are New Zealand, Denmark, Finland, Sweden, and Singapore. On the other end, the lowest rated nations on the CPI are Uzbekistan, Afghanistan, Myanmar, North Korea, and Somalia.

There definitely seems to be a trend with CPI scores and the economic and social development of the nation. The nations on the lower end of the spectrum with high perceptions of corruption have weak economic factors and generally don't have much foreign direct investment. This perception is no surprise as these nations tend to be ones in which controversy, war, and unstable governments reside. Whereas nations with low corruption perceptions have strong economies and are more welcoming for new market entry.

Sources:

Indian Trade Data. www.cybex.in/. Indian Custom Duty: Pharmaceutical Products.

Transparency International. 2011 Corruption Perceptions Index. www.transparency.org/cpi2011/results/