Updated: Nov 23, 2021
In the general parlance of economics, the term “dumping” refers to any type of predatory pricing. Predatory pricing is basically the practice in which the product is sold at the price lesser than that of normal price intending to create the hindrance for the potential competitors to enter into the business that prevail in the market. To prohibit such dumping activities and to ensure that activities do not affect the local industries of the nation, the government of India has imposed duties against such exporters who cause any substantial or material loss to the Indian local market. The Custom Tariff Act, 1975, which was later amended in the year 1975 is the anti-dumping Law in India.
Background of Anti dumping laws in India:
After achieving independence, India felt the need for industrialization in order to liberate the nation from unemployment, poverty and many of such social evils. The Industrial Policy Resolution was adopted by the Indian government in 1950 which encouraged the growth of industries for development. However, still the need for anti-dumping law was felt because there was need to prohibit unfair competition of foreign companies.
In 1982, the legal frameworks were introduced for imposing anti-dumping when some sections were added to the Customs Tariff Act, 1975 (these sections were section 9, 9A to 9C). This was the foremost step when India approached of having anti-dumping law which was the only independent act at that time for preventing unfair marketing. These sections were amended later on after signing of the texts for the Uruguay Round Negotiation under GATT in order to comply with the legal with WTO. Compliance was for Implementation of GATT (mainly Article VI) 1994. Simultaneously, the Custom tariff Rules, 1995 was introduced.
Significance of Anti dumping Laws:
In the modern era with the advent of liberalization and globalization, measures relating to anti-dumping have assumed a much more significance as compared to past. It is need of the hour that every country to protect its domestic (that is local) market from unfair, unjust practices and these laws help in tackling such problem.
· Imposing Anti-dumping Duties: It is one of such remedy which is most common against dumping. These duties are form of sanction which is imposed at a very high rate upon non-cooperative exporters.
· Safeguards: There is another remedy which can be enforced as an emergency step or measure is safeguards in reply to the flow in import of a specific product.
Parameters for calculating Dumping:
· Normal Value:
Usually, the normal value can be determined when prices at which “like goods” are exported in ordinary course of business in the domestic industry. If due to lack of sales in domestic industries, normal value cannot be determined then there are alternative methods to determine dumping like finding out the cost of production in the nation.
· Export Price:
The export price of the products which are being dumped into India means the amount at which the product is exported to the nation.
· Dumping Margin:
The difference between the normal value and price at which the good is exported is Dumping Margin. It is usually expressed in form of percentage.
Procedure of levying Anti dumping duty in India:
Initiation of investigation:
First step is to file an application by the domestic industry or DGAD (The Directorate of Anti-Dumping and Allied Duties) may take cognizance on its own. When proceeding initiates, then responses are being invited from about fifty percent domestic producers that constituted the overall domestic market of India.
Issue of Public Notice:
If the authority is convinced with the application and is satisfied that there is prima facie a case of dumping, then in such under Rule 6(1), a public notice is issued by him notifying its decision.
The provisional anti-dumping duty is being levied on the basis of preliminary inquiry or findings, in this investigation, the central government according to section 9A, the provisional duty which is imposed may be of amount of margin of such dumping.
Final findings are being made based on the inspection of importers and domestic industry. When the investigation is completed, the final finding is submitted to central government. At last, levying of final duty is imposed on the exporting company.
Implementation of relief provided under Indian Law:
In order to claim relief under anti-dumping law, a domestic industry must show that the substantial injury is made by such dumping. Injury which is material can be established only when following are established:
· Volume Effect (1st Step): The appropriate authorities determine the increase in amount of imported dumped material. It is examined either in absolute terms or consumption in India or with respect to the production and its impact on the domestic market. If it is found that volume is higher in terms then it means that next step is reached.
· Price Effect (2nd Step): Price effect means that if there is a large scale inflow of material goods in the domestic market then this may lead to lowering of prices and thus it means that domestic players have to bear the loss.
· Causal Link (3rd Step): Existence of a causal link must be shown between the dumped goods and the substantial/material injury which is being suffered.
If abovementioned conditions are fulfilled, then the relief is being provided.
Extent of Anti dumping duty in India:
As per the WTO Agreement, the extent up to which the appropriate authorities can impose duties is the margin of dumping.
Imposing Anti dumping duty Retrospectively & Prospectively:
1. Imposing duty provisionally:
As per section 9A of the Act, the appropriate government(Central in this case) on the basis of estimate which is provisional in nature shall levy anti-dumping duty on the importation of those items. The duty is imposed according to the parameters like margin and normal value.
2. Imposing duty retrospectively:
If Central government is of the opinion in relation to dumped article that there existed any history of dumping and that importer was aware about the fact that exporter was indulged in dumping practices.
Dumping is process where exportation of goods from one country to another country at a price lesser than that of normal price. This leads to the hampering of domestic market. To stop such unfair trade practice, anti-dumping measures are being adopted. Though anti-dumping laws are somewhat violative of basic principles of free trade but it is the only remedy which is available for the domestic industries and if properly implemented it can help in providing a boost to the domestic market of the nation.