What is Anti-Dumping Duty-UPSC (Prelims & Mains)

Anti-dumping is a trade practice to prevent companies from importing products from another country or region at prices that are lower than the domestic price. Anti-dumping duties are imposed by governments on foreign imports.

Anti-dumping is a trade practice to prevent companies from importing products from another country or region at prices that are lower than the domestic price. Anti-dumping duties are imposed by governments on foreign imports.

This can be done in two ways –

The government concerned may levy an anti-dumping duty on the product concerned or the government may impose a quantitative restriction to restrict the number of units entering the country.

Anti dumping duties are imposed on imported products when the exporter has exported these products at below normal value for a long period of time. This is done to protect domestic industries which may suffer due to predatory pricing by foreign exporters.

Anti-dumping duties are typically levied by countries to offset subsidies or financial assistance provided by foreign governments to their manufacturers, to help them export their goods at low prices. Anti-dumping duties are meant to level the playing field for local industries affected by such subsidization.

Textiles and steel are two industries with a long history of anti-dumping duties. In the US, for example, the government will impose high tariffs on some steel imports, supposedly to protect the “national security” of the country. This was especially prevalent during the Cold War when they were used to prevent Soviet access to non-American steel

  • Objective of Anti-Dumping Duty (ADD):
    • Imposition of Anti-dumping duty is a measure to rectify the situation arising out of the dumping of goods and its trade distortive effect.
    • In the long-term, anti-dumping duties can reduce the international competition of domestic companies producing similar goods.
    • It is a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below fair market value.
    • The use of anti-dumping measures as an instrument of fair competition is permitted by the World Trade Organisation.

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 challenges 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.

Need of the hour

  • 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.

For latest Articles [Paper wise GS 1-4] and Solved papers[2010-2020] join us @ https://t.me/UPSCexamNotes1

For solved

UPSC ESSAYS click here

GS Paper 1 click here


Gs Paper 2 click here

Gs paper 3 click here

GS paper 4 click here

Sociology click here

%d bloggers like this:
Your Ads Code Here....