What is the issue?
Indian economy continues to be hurt by dumping of products from other countries and there is a need for a clear procedure to levy anti-dumping duties.
Why should an anti-dumping duty be levied?
- Dumping is a process where a company exports a product at a price lower than the price it normally charges in its home market.
- An anti-dumping duty is a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below fair market value.
- India is one of the largest consumption economies in the world and a potential ground for dumping a wide variety of goods, especially from China, Taiwan and South Korea.
- Thus, India must have strong anti-dumping defences in place.
What are the concerns in dealing with dumping?
- Under-staffing - The Directorate General of Trade Remedies (DGTR) that looks at unfair trade practices by exporters from other countries, is inadequately staffed.
- DGTR has just seven costing officers and five investigating officers and the allocation of work is uneven among them.
- This has resulted in delay and arbitrariness in decision-making.
- Duty Imposition - Generally, once initial investigation reveals injury on account of dumping, an interim duty is levied for immediate relief.
- A final duty is levied after extensive investigation.
- Every case taken up for investigation had interim duties levied in 2009.
- But this has gradually declined in recent years.
- Imposition of interim and final duties are also invariably delayed.
- This has resulted in shutting down of MSMEs who are unable to compete in the market.
- e.g In many case, getting the case initiated itself takes about a year, which is followed by Finance Ministry taking another 3 months to impose ADD.
- Sunset review - ADD is applicable only for a selective period.
- If dumping still continues, the industry can apply for a sunset review at the end of 5 years.
- Globally, once a sunset review is applied for, the ADD is extended for 1 year pending investigation.
- In India, industries has been asked to apply for sunset review 9 months before the expiry of ADD.
- This made the Indian players getting deprived of protection for a year compared to their peers across the world.
- This is critical because the DGTR has been rejecting almost every sunset review application.
- Difference of opinion - In 2018, only one of seven reviews was duty extended.
- DGTR is increasingly hesitant to extend ADD beyond 10 years on the grounds that this period is good enough for the industry to become competitive.
- But the industry players argue that as long as dumping continues ADDs need to be in place to protect the domestic industry.
- Duty calculation - Dumping margin is the difference between the normal value and the export price of the goods under complaint.
- Lesser duty means lesser of dumping margin or injury margin.
- Anti-dumping duty should be either equal to dumping margin or lesser amount, which is sufficient to redress injury.
- India follows a ‘lesser duty’ rule.
- Also, at times, even when DGTR recommends ADD, the Finance Ministry declines on the ground that low-priced imports are good for the country.
What should be done?
- Predatorily priced imports will eventually kill the domestic industry and make the country dependent on imports.
- Hence DGTR has to lay down a clear procedure on levying anti-dumping duties in India such that a balance between domestic production and local consumption be ensured.
Source: Business Line
