The Directorate General of Trade Remedies (DGTR) of India recently recommended that the country impose Anti-Dumping Duties (ADD) on five specific products imported from China, including certain aluminium goods and chemical substances. The DGTR concluded that these items were being exported at prices below their usual value in the Indian market. This practice was causing significant damage to local industries, leading to the imposition of the duties.
Trade Balance with China
During the April-September 2021 period, India exported goods worth USD 12.26 billion to China. However, imports from China significantly outweighed the exports, reaching USD 42.33 billion. This created a trade deficit of USD 30.07 billion for the period mentioned.
The Role of the Directorate General of Trade Remedies
The DGTR operates under the Ministry of Commerce and Industry and is the ultimate national authority responsible for all trade remedies. The body deals with matters such as anti-dumping, countervailing duties and safeguard measures, providing crucial support to domestic industries and exporters facing increasing instances of trade investigations by other countries.
Understanding Dumping
Dumping occurs when one country exports goods to another country at prices lower than what it charges in its home market. This unfair trading practice can significantly distort international trade.
Purpose of Anti-Dumping Duty
The imposition of ADD aims to correct situations arising from the dumping of goods and its trade-distorting effect. In the long run, ADD can curb the international competition faced by domestic companies producing similar goods. It is essentially a protective tariff imposed on foreign imports believed to be priced below the fair market value. The World Trade Organisation permits the use of anti-dumping measures as a tool for fair competition.
Distinguishing Anti-Dumping Duty from Countervailing Duties
While ADD is a customs duty on imports that protect against dumping goods at prices much lower than their normal value, countervailing duty is a customs duty applied to goods that have received government subsidies in the country of origin or export.
World Trade Organisation’s Provisions on Anti-Dumping Duty
According to World Trade Organisation regulations, an anti-dumping duty remains valid for a span of five years from the date of imposition, unless revoked earlier. There is provision for extension of this period for another five years through a sunset or expiry review investigation. This type of review evaluates the need for the continued existence of a program or agency, assessing its efficiency and performance. Such a review can be initiated either directly or based on a substantiated request received from the domestic industry.