After the Government of India banned China’s apps, the government has given another big blow to China. The Indian government has imposed anti-dumping duty on parts and components imported from China for five years. After the India-China border tension, the people of the country were demanding a boycott of Chinese goods from the government.
China has always dumped cheap and inferior quality Chinese goods to India by taking advantage of the World Trade Organization and Free Trade Agreement. The Directorate General of Trade Remedies (DGTR) has imposed anti-dumping duty on their imports.
India has reportedly extended imposition of safeguard duty and placed anti-dumping duties (ADD) on various import items to protect domestic manufacturers and to bar China from allegedly dumping products like solar cells, digital offset printing plates and industrial raw material.
Chinese imports are likely to be the worst affected. The safeguard duty is also applicable to competitor countries Vietnam and Thailand, but not other developing countries.
What is an ANTI-DUMPING in International Trade?
Dumping is said to occur when the goods are exported by a country to another country at a price lower than itsnormal value. This is an unfair trade practice which can have a distortive effect on international trade.
Anti-dumping is a measure to rectify the situation arising out of the dumping of goods and its trade distortive effect. Thus, the purpose of anti-dumping duty is to rectify the trade distortive effect of dumping and re-establish fair trade. The use of anti-dumping measure as an instrument of fair competition is permitted by the WTO. In fact, anti-dumping is an instrument for ensuring fair trade and is not a measure of protection per se for the domestic industry. It provides relief to the domestic industry against the injury caused by dumping.
Does dumping mean cheap or low priced imports ?
Often, dumping is mistaken and simplified to mean cheap or low priced imports. However, it is a misunderstanding of the term. On the other hand, dumping, in its legal sense, means export of goods by a country to another country at a price lower than its normal value. Thus, dumping implies low priced imports only in the relative sense (relative to the normal value), and not in absolute sense.
Import of cheap products through illegal trade channels like smuggling do not fall within the purview of anti-dumping measures.
Is anti-dumping a measure of protection for domestic industry?
Anti-dumping, in common parlance, is understood as a measure of protection for domestic industry. However, anti-dumping measures do not provide protection per se to the domestic industry. It only serves the purpose of providing remedy to the domestic industry against the injury caused by the unfair trade practice of dumping.
In fact, anti-dumping is a trade remedial measure to counteract the trade distortion caused by dumping and the consequential injury to the domestic industry. Only in this sense, it can be seen as a protective measure. It can never be regarded as a protectionist measure.
Anti- Dumping Duty, India 2020.
The duty was imposed after the Commerce Ministry’s investigation arm Directorate General of Trade Remedies (DGTR), in its probe, concluded that the product was exported to India by these countries below its associated normal value, which resulted in dumping and in turn impacting domestic players.
“The anti-dumping duty imposed under this notification shall be effective for a period of five years (unless revoked, amended or superseded earlier) from the date of imposition of the provisional anti-dumping duty, that is, October 15, 2019,” the department of revenue said in a notification.
According to global trade norms, a country is allowed to impose tariffs on such dumped products to provide a level-playing field to domestic manufacturers. The duty is imposed only after a thorough investigation by a quasi-judicial body, such as DGTR, in India.
What is a Safeguard Duty which has been imposed on solar goods?
Safeguard duty is a temporary relief provided when imports of a product increase unexpectedly to a point where they threaten domestic manufacturers of similar products. It is distinct from countervailing duty and anti-dumping duty, which are also used to protect the local industry.
Safeguard duty is duty payable on import of goods which is already being manufactured in India but cost of which is high compared to import price. It is imposed by Central Government on goods so that the Indian manufacturers do not suffer due to import of cheaper goods from outside.
In July 2018, the Government of India imposed a two-year safeguard duty on solar cells and modules, in an attempt to protect domestic manufacturing which has been now extended to another year. This policy brief discusses the impact of that duty on the business prospects of manufacturers. It also analyses the implications of the duty on the rest of the solar sector, including facets such as project deployment, job creation, and investor sentiment.
What is the Safeguard Duty Safeguarding?
- Safeguard duties only protect a section of Indian PV manufacturers. While cell manufacturers would benefit, a
considerable chunk of module manufacturers are reliant on imported cells, which will result in an increase in input cost. Module manufacturing capacity far outstrips (~8.9 GW) cell manufacturing (~3.1 GW) in India.
- The duty does not address the causes of the competitive disadvantage associated with Indian PV manufacturing such as inferior terms of debt capital, higher electricity prices, lower-scale operations, the lack of vertical integration, the lack of investment in new technologies, and demand uncertainty. Hence, it is unlikely to encourage investments in new facilities.
- In the current form, the safeguard duty hinders the reduction in solar tariffs. Tariffs could be six to ten per cent lower in the absence of duties.
Chinese exporters face heat of more anti-dumping and safeguard duties.
India has stepped up the heat on imports from China for injuring domestic producers by allegedly dumping products like digital offset printing plates, solar cells and a raw material used in making industrial chemicals.
The revenue department has notified continuation of safeguard duty on solar cells and panels for another year, and imposed definitive anti-dumping duty on import of digital offset printing plates and provisional anti-dumping duty on aniline oil used in making certain industrial chemicals. The decisions were announced in three separate orders late on Wednesday night.
The extension of safeguard duty on solar cells and panels came as the existing safeguard duty on the item expired on 29 July. The revenue department order said that safeguard duty is to be paid on these items at the rate of 14.9% for the first six months and at 14.5% for the remaining six months. Exporters will be offered relief from the safeguard duty to the extent of any anti-dumping duty paid on the items. The duty applies to imports from Thailand and Vietnam too but excludes imports from any other developing country.
India- China Stand-off in an Economic War:
The move is the latest in an economic offensive against China with which India had a border clash last. So far, has banned dozens of Chinese smartphone apps, ordered e-commerce firms to disclose to shopper’s origin of the products offered on their platforms and banned companies from China and Pakistan from bidding for government contracts without specific approval from competent authorities.
Prime Minister Narendra Modi has advocated self-reliance as a growth strategy, which will also help wean Indian producers from over dependence on raw materials from China, especially in sectors like automobiles, pharmaceuticals and electronics.
In the case of digital offset printing plates, the anti-dumping duty is also applicable to imports from select companies from Japan, Republic of Korea, Taiwan and Vietnam at specified rates. The duty on aniline oil is up to $150.8 per tonne and applies to any Chinese import routed through other countries too.
Is it practically possible for an Indian to Boycott on Chinese Products?
Maximum mobile brands in Indian market are Chinese Brands which includes Vivo, Xiaomi, OnePlus, Lenovo, Huawei. Apple’s iPhone and iPad have significant parts that are produced in China. Amidst this hoax of #BoycottChinaProducts campaign itself the newly launched model of OnePlus went out of stock in minutes after its online launch on Amazon.
We are completely surrounded by the Chinese products in every possible manner. From a minor nail cutter to the calculator, from children’s toys to the bedsheets and curtains in our houses, from a basic pen to the laptop we use, from online transaction through Paytm to online shopping sites like Shein and to note AliBaba has the highest share of investment in the business of Zomato and Snapdeal.
Pulp of paper, textile fabrics, articles of plaster, glassware, utensils, crockery, furniture, vehicles, fertilisers, heavy machinery etc. all of these basics that we consume directly or indirectly are imported from China and we are actively and passively using Chinese products extensively in our daily lives. No matter which service or product we avail, Chinese market has completely attacked Indian lives. Withdrawing ourselves from availing these services or not purchasing these products is not happening practically in decades to come.
All the raw material in the accessories made in India comes from China. Battery and LCD are the most in demand and both of them come from China. Because Chinese companies provide good finishing, they are very much liked among the people.
However, the Confederation of All India Traders (CAT), the apex organization of the country’s traders, is going to make the festivals special. CAT claimed that Chinese goods would be completely boycotted in the coming festivals and domestic products would be available in abundance.
Chinese imports are likely to be the worst affected. India is aiming at limiting trade links with China as part of a policy to cut dependence on its northern neighbour. The government in April notified changes to its foreign direct investment (FDI) policy by mandating government clearance for all FDI inflows from countries with whom it shares land borders