Prevention of Dumping - Crucial for maintaining healthy Competition in the economy
To curb the practice of dumping of products the government of various states have come up with the idea of imposing duties which are being levied against countries practicingdumping. These Anti-dumping duties help in combating dumping practices and also serve as a weapon to be used in the developing nations like India to protect its domestic market from unwanted competition arriving from the developed nation.
Under International trade, this practice is considered to be unacceptable which have a distorting effect on a global trade. That is the reason why Anti-dumping laws are being imposed upon by the countries to rectify the situation arising out of dumping of goods and other effects developed from its trade. To formulate trade practices it is necessary to develop a law which will impose restrictions against the practice of dumping so as to establish a fair trade network worldwide. The use of these anti-dumping measures by the countries considered as an instrument of fair competition as permitted by the WTO.
Authorities responsible for enforcing Anti- Dumping Laws in India
India is considered to be the frequent users of anti-dumping measures effectively as for the protection of its domestic industries. In India, although anti-dumping duty is levied and collected by the Customs Authorities . However, it is entirely different from customs duties. Top corporate advocates can be consulted to understand the concept of dumping and the legal action against it.
Further, in India, anti-dumping and anti-subsidy investigations are conducted by Directorate General of Anti-dumping and Allied Duties (DGAD) , which is a separate department under Ministry of Commerce. Safeguard investigations , on the other hand, are conducted by Directorate General of Safeguards , which falls under the Ministry of Finance.
Indian Legislation regulating and controlling Anti-Dumping
The legal framework for imposing anti-dumping and countervailing measures in India was put in place in 1982 when Sections 9, 9A, 9B and 9C were added to the Customs Tariff Act, 1975, the first step in the direction of having an independent law for anti-dumping was the enactment of Customs Tariff (Identification, Assessment and Collection of duty or Additional duty on Dumped Articles and for Determination of Injury) Rules, 1985. This provision, which provided detailed provisions for conducting investigations and imposing anti-dumping and countervailing duties, rarely found use largely due to the trade restriction and high import tariff prevailing during this period in the country.
The Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 and Customs Tariff (Identification, Assessment and Collection of Countervailing Duty on Subsidised Articles and for Determination of Injury) Rules, 1995 were also introduced after repealing the earlier Rules. These Rules are commonly known as Anti-Dumping Rules and Countervailing Duty Rules, respectively are presently governs the subject to anti-dumping in India.
These laws which are being developed for anti-dumping in India are based on Article VI of GATT 1994 ; Customs Tariff Act, 1975 - Sec 9A, 9B; Anti-Dumping Rules, 1995; Investigations and Recommendations by Designated Authority, Ministry of Commerce; Imposition and Collection by Ministry of Finance.
The remedy under anti-dumping provisions is available only in such situations, where the dumping margin of goods from an exporting country into the importing country has resulted in injury to the domestic industry of that good in the importing country. Thus, the imposition of AD duties involves a detailed examination of 3 principal factors – Dumping, Injury and Causal Link.
Rules Regulating Anti-Dumping in India
Rule 10 of the Anti Dumping Rules states that an article shall be considered as being dumped if it is exported from a country or territory to India at a price less than its normal value. This means that ‘dumping margin’ is the difference between the ‘normal’ value of such product and its corresponding export price.
Dumping Margin = Normal value – Export price
When is dumping as defined by Rule 10 considered to be Injurious
A domestic industry is said to be injured when its vital signs attributable to the product concerned, collectively show a significant deterioration. In terms of Section 9B , anti-dumping duties shall be imposed only when the dumped imports cause material injury to the domestic industry. The term ‘ material injury ’ includes a threat of material injury and material retardation of the establishment of the domestic industry.
While threat of material injury implies that domestic industry, though may not be suffering any injury at present, but injury is likely if unfair imports are allowed to enter into India without a check, material retardation, on the other hand, means injury to the do Injury to domestic industry is ascertained by DGAD by broadly examining two aspects – Volume effect and price effect of imports coming into India. Once injury to domestic industry is established by examining all the relevant economic parameters, DGAD quantifies the extent of injury by arriving at an injury margin.
Injury margin is determined as the difference between the Non-Injurious Price (or Fair Selling Price) of the domestic industry and the landed value of imports coming into the country. This tells the extent to which the imported goods are ‘underselling’ as compared to the fair selling price of the domestic industry.
Casual Link must exist between the act of Dumping and Injury to Domestic Industry
Any antidumping investigation is dependant on the establishment of a causal link between dumping and material injury to the domestic industry. It must be demonstrated that the dumped imports are, through the effects of dumping, causing injury to the domestic industry. The demonstration of the causal relationship shall be based on an examination of all relevant evidence before DGAD. The use of the words “through the effects of dumping” indicates a clear causal link between the dumped imports and the material injury.
Initiating an Anti Dumping Investigation in India
The following are essential for initiating an anti-dumping investigation:-
Sufficient evidence (Bill of Entry, Invoices, Letter from the Indian Mission in the subject country, Data from secondary sources like specialized commodity journals etc. as to the existence of dumping in relation to the goods imported from the subject country) to the effect that
- there is dumping
- there is an injury to the domestic industry; and
- there is a causal link between the dumping and the injury, that is to say, that the dumped imports have caused the alleged injury.
- The domestic producers expressly supporting the anti-dumping application must account for not less than 25% of the total production of the like article by the domestic industry.
Anti-dumping measures are used in most countries by the state to protect its domestic players in the market. So in India as well a dumping investigation can be initiated on a complaint by a “Domestic Industry.”
Ministry of Commerce and Industry defines Domestic Industry as, Producers of Like Articles as a whole or those producers whose cumulative output constitutes a major chunk of total Indian production. The complaint has to be in the form of written Application by or on behalf of Domestic Industry.
The application is deemed to have been made by or on behalf of the domestic industry, if it is supported by those domestic producers whose collective output constitute more than 50% of the total production of the like article produced by that portion of the domestic industry expressing either support for or opposition as the case may be, to the application.
Any country in the world is not self-sufficient or self-reliant; in fact, every country is dependent upon each other whether how much developed the country is. Therefore, for the growth of any country, it is imperative to have free and fair trade to ensure equal conditions and opportunities available to each and every country to prosper. Dumping is one such practice that hampers this prospect. India though has laws in this regard but they are far from being perfect, implementation faults combined with the purgative approach of government often leads to excessive dumping in few areas of the economy, it needs to be curbed as soon as possible for India to have a desirable economy to which it has always dreamed for.
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