10. Mr. DENNISSasked the Secretary of State for India whether the imposition of an increased Import Duty of 3½ to 7½per cent. on cotton, goods contemplated by the Indian Government with no corresponding increase in the Excise Duty on the products of Indian cotton factories is contrary to the established practice and understanding between the two Governments; whether, at a time when the price of raw cotton in this country is higher than at any period since the American Civil War and coal and other materials are at unprecedented prices, such extra import duties are bound to cause serious injury to the English cotton export trade to India; and whether he intends to take any, and what, action in the matter?
§ The SECRETARY of STATE for INDIA (Mr. Chamberlain)When last year it became necessary to raise fresh taxation in India, the Government of India proposed as one source of increased revenue an increase of the Customs Duties on cotton goods. At that time the revenue was required for purely Indian purposes, and it was contemplated that any share which India might take in the cost of the War should be settled only when the War was concluded. Accordingly His Majesty's Government authorised an announcement by the then Viceroy in the following terms:
His Majesty's Government feel that the fiscal relationship of all parts of the Empire and the rest of the world must be reconsidered after the War, and they desire to leave the questions raised by the Cotton Duties to be considered at the same time in connection with the general fiscal policy of the Empire and with the share, military and financial, taken by India in the struggle.In consequence of this decision the Cotton Duties were left untouched, and the Government of India made up their revenue by imposing export duties on tea and jute.4 Since that time the financial conditions of India have undergone a great improvement, and it has become possible for the Government of India to propose in accordance with a widely-expressed-wish an immediate contribution. They offered accordingly to raise or to bear the charges of £100,000,000 of War debt, but for this purpose they required a further addition to their resources, which they proposed to secure, first, by a Super-tax on income; secondly, by the increase of the Cotton Duties; and, thirdly, by some minor changes.
I laid these proposals before His Majesty's Government, by whom the offer of the Indian Government was gratefully accepted; and the financial share of India in the War being thus settled and its military contribution, whether in men or in other ways, being also determined, His Majesty's present advisers, in pursuance of the conditions laid down by the late Cabinet, and, as I conceive, in full accordance with the spirit of their declaration, authorised the proposal contained in the Indian Budget. I am not unmindful of the controversies which this question has raised in past times and under different circumstances, but I trust that in these days of strain and stress and common Imperial effort I may appeal with confidence to those in this country who are more immediately interested not to raise objections to a measure which is necessary if India is to render to the Empire the help which it is her desire to give.
Mr. RUNCIMANHas the increase in the Import Duty already taken effect, and was any proposal for a corresponding Excise Duty considered by the Indian Government?
§ Mr. CHAMBERLAINI think the in creased Import Duty has already taken effect. My right hon. Friend knows that the Indian Government has considered the Excise Duties ever since they were first suggested, and there is no subject upon which Indian opinion is more unanimous than in reprobationary excise duties; to have insisted that the rise in the Customs Duty should have been accompanied by a corresponding rise in the Excise would have made it impossible to secure the Grant from India which, I believe, is now-being given with the good will of all her people.
§ Mr. LOUGHWill the right hon. Gentleman say whether the £100,000,000 Grant is a loan or a free gift on the part of India? I did not catch the answer.
§ Mr. CHAMBERLAINA free gift, Sir. It rather goes beyond the original question, but I think I ought to make it clear that it is not contemplated that the whole of such a sum as that can be raised in India. The largest amount raised on a single occasion has been £6,000,000, so far as I remember—at all events in recent times. The offer of the Indian Government is to raise whatever money they can in India, and then to make up the balance of the £100,000,000 by bearing the charges of the British Loan to that amount.