Even as it woos investors, India must maintain a strong vigil on dumping

Deciding the approach to be taken on the imposition of anti-dumping duties by drawing comparisons with other countries on the number of times each one of them has imposed anti-dumping duties may not always yield the right results.

India going the distance in trying to strengthen its market-friendly credentials among the who's who of the investor community worldwide to fast-track the progress of a nation, where nearly 17 percent of the global population resides, is a positive development and is in sync with its Sabka Vikas (development for all) agenda.

It also sends out the right signal to all stakeholders ahead of the key G20 Leaders’ Summit that the country would host this September in its capacity as the current holder of the G20 Presidency.

Having said that, India should not allow this business-friendly approach to come in the way of its vigorous enforcement of anti-dumping provisions in instances where the designated organisation handling this issue – the Directorate General of Trade Remedies, Department of Commerce, Ministry of Commerce and Industry – feels that doing so is necessary to ensure free and fair trade, and to provide a level-playing field for local enterprises.

The reason for bringing this up is because of a recent study titled ‘Protecting Atmanirbhar – Report on challenges in protecting domestic industries’ prepared by the Delhi-based think tank Centre for Digital Economy Policy Research (C-DEP) which said that only 44 of the 120 recommendations made by the DGTR between September 2020 and October 2022 were accepted by the Ministry of Finance. The report went on to claim that the Ministry of Finance did not provide any reasons for the cases where it had rejected the DGTR’s recommendation on levying/extension of anti-dumping duty.

While we wait to hear more on the reasons behind the high rate of rejections of the DGTR’s recommendations by the Ministry of Finance, it can be said, though, with a reasonable degree of confidence that there is little likelihood of India taking a strong stance in cases where dumping is proven having a potentially negative effect on its ability to attract big ticket investments from overseas, and the nation being perceived as protectionist.

Anti-dumping duties are an effective trade defence mechanism and nations are permitted to employ this measure by the World Trade Organization (WTO). All countries, including the United States, the world's biggest economy, impose anti-dumping duties from time to time if a detailed investigation leads concerned authorities to the conclusion that levying of anti-dumping duties is required to ensure that their markets are not becoming the dumping ground of overseas entities seemingly seeking to gain an unfair advantage.

Deciding the approach to be taken on the imposition of anti-dumping duties by drawing comparisons with other countries on the number of times each one of them has imposed anti-dumping duties may not always yield the right results. The reason for that being that dumping and the extent of it often depends on the size and opportunities presented by the target market.

As a large developing country hungry for growth, India affords multiple business opportunities in diverse spheres to existing and prospective foreign investors. This also raises the prospect of a higher incidence of dumped goods entering India and the need for continuous vigil in this regard.

Sight must not be lost of the fact that large-scale dumping, if not dealt with firmly, can potentially have a terrible impact on all sections of Indian industry, with the critical MSME segment that forms the bulwark of our economy and generates the highest number of jobs being hit the hardest. Representatives of MSMEs have often raised their concerns about unfair trade practices by certain exporting countries.

Rampant dumping can also act as a barrier for several signature initiatives such as ‘Make in India’, ‘Digital India’, etc., besides acting as a hindrance to the process of creating decent, quality jobs and livelihood opportunities for the country’s ever-growing workforce. India’s geographical proximity to China, moreover, makes it imperative that we do not loosen our guard on the dumping issue.

As one of the few bright spots in the world economy currently, India can now make its voice heard more strongly than ever before. Taking a tough stance on the dumping issue would send out a clear message that while India would always have its doors open for the investor community that agrees to play by the rules, it would not hesitate to come down hard on those who try to resort to unfair means to gain market access.