India Targets China, Japan with Anti-Dumping Duties

India has also imposed an anti-dumping duty of up to $986 a tonne on Trichloroisocyanuric acid, a water treatment product, from Japan and China. The step, suggested by the Directorate General of Trade Remedies (DGTR), is with a view to giving protection to domestic producers against dumping of low-value goods which had been affecting the local industry negatively. The order will remain in effect for five years unless revoked or modified earlier, the Ministry of Finance stated.

The anti-dumping investigation was initiated to determine whether Chinese and Japanese imports were hurting the domestic industry by selling their products at prices lower than their fair market value. The DGTR, a government agency in the Ministry of Commerce, held that Indian manufacturers of Trichloroisocyanuric acid had suffered material injury due to cheaper imports. In its investigation, the directorate recommended the imposition of anti-dumping duty so that level playing field would be brought back to the market.

India being a WTO member adopts international norms of trade but imposes such levies. Anti-dumping levies are not intended to restrict trade but to make the field level for domestic producers. Countries impose such levies when they find foreign companies selling below-cost prices, usually lower than their cost of production, hurting local business.

Trichloroisocyanuric acid is ubiquitous in water disinfection, treatment, and sanitation. The product is required by swimming pools, drinking water purification, and wastewater treatment plants. The country has been solely dependent on imports from Japan and China, which are exporting the product at much cheaper prices. That cheap price, however, most often is the result of some form of impropriety such as government subsidization or market distortion.

The process of imposing an anti-dumping duty is a careful investigation by the DGTR. Once the directorate determines that an imported product is harming the domestic industry, it submits its findings to the Ministry of Finance, which takes the decision to impose duties. The process lasts a few months, but once the duties are imposed, they stay for decades to allow the domestic industry to recover and grow.

Japan and China are two of India's biggest trade partners, and such imposition of duty can hurt trade relationships in the chemicals sector. All this is done so that Indian manufacturers have an opportunity to compete fairly without the inhibition of artificially cheap imports. The action is also in line with India's overall trade policies of reducing dependence on foreign suppliers in strategic industry sectors.

The imposition of this anti-dumping duty should motivate local investment in water treatment chemicals and strengthen the Indian industrial base. It will stabilize price in the market, and domestic manufacturers will be able to survive without threat from cheap foreign imports. Consumers will have to pay a bit more, but it is a fair exchange for long-term benefits of a long-lasting and inexpensive local industry.

In the future, the government may revisit the impact of the duty on the home economy and foreign trade patterns. Where appropriate, adjustments to the policy can be made based on industry input and foreign trade negotiations. The action demonstrates India's desire to protect its industries but in accordance with fair trade principles under WTO agreements.

Source & Credits:Information sourced from Economic Times and Business Standard.