Government Cracks Down on Dumping Practices, Impacts on Domestic Industries

In recent years, the Indian government has taken stringent measures to curb the influx of dumped goods, particularly from China, into the market. Notably, over one-third of the anti-dumping duties (ADD) imposed by the Finance Ministry in the past three fiscal years targeted goods produced either by a sole domestic producer or by just two producers, with a significant focus on the chemical industry.

According to a GTRI report, between FY19 and FY24, India’s imports from China surged from $70 billion to $101 billion while exports to China remained stagnant at around $16 billion annually.

In the fiscal year 2023, the number of concluded cases dropped by half to 25, out of which 24 ended with a recommendation for ADD. However, the Central Board of Indirect Taxes and Customs (CBIC) accepted only 10 of these recommendations, with three cases exclusively concerning goods from China and four involving goods from at least one other country.

A significant portion of the ADDs, approximately 60 percent, targeted goods solely from China, while 26 percent targeted goods originating from China along with another country. This indicates a concentrated effort to address dumping practices originating primarily from China. Moreover, there has been a notable increase in the Finance Ministry’s acceptance of ADD recommendations from the Ministry of Commerce and Industry, rising to 86 percent in FY24 from 42 percent in previous fiscal years.

The Directorate General of Trade Remedies (DGTR), India’s trade watchdog under the Commerce Ministry, played a pivotal role in recommending ADD in numerous investigations over the last three fiscal years. Approximately 33 percent of these investigations covered goods produced by either a sole domestic producer or at most two producers, primarily highlighted in proceedings by the DGTR. CBIC, in response, levied ADD on goods covered by 46 of these cases, representing 50 percent of the recommendations received from DGTR.

The impact of these anti-dumping measures on downstream users, who often benefit from cheaper imports of raw materials, is a significant consideration in the government’s decision-making process. The Finance Ministry carefully evaluates the evidence presented in DGTR investigations before deciding on the imposition of ADD. Notably, in some cases, ADD recommendations were not upheld, such as in the import of viscose staple fibre (VSF) in 2023, following representations from user industries.

The debate surrounding the imposition of ADDs often revolves around the balance between protecting domestic industries and fostering competition. While some argue for the necessity of ADDs to ensure a level playing field, others question their impact on downstream industries and the broader economy. Nonetheless, the imposition of ADDs remains a legitimate trade remedial measure under WTO rules.

Looking ahead, there are ongoing cases targeting goods produced by sole producers, with a particular focus on products from China. These measures reflect the government’s commitment to safeguarding domestic industries from unfair trade practices while promoting a more competitive market environment.

In conclusion, as India navigates the complexities of international trade, addressing dumping practices remains a key priority to ensure the sustainability and growth of domestic industries.