What is dumping?
Dumping occurs when a country or company exports a good at a price lower than its "normal value" in the importing country's market. This "normal value" can be based on the price in the exporting country, production cost, or a third-country market. By selling at a significantly lower price, the exporter aims to gain market share and potentially harm the domestic industry in the importing country.
Dumping in Indian Economics
Price manipulation and unfair play: Dumping, a practice considered unequal pricing tactics and a breach of fair trade principles, has led many countries to adopt countermeasures to protect their domestic industries from its harmful effects. These protective measures come in the form of tariffs or levies imposed on imported goods found to be dumped. Their aim is to bump up the price of the imported products to a level playing field and rebalance the market competition.
India in the crosshairs: As a victim of price-slashing from other countries, particularly China, India has faced the brunt of dumping in various sectors like steel, chemicals, solar panels, and toys. China has allegedly employed dubious tactics like understated invoices, false declarations, rerouting, and even smuggling to dump these products. This has dealt a severe blow to several domestic industries in India, including iron and steel, chemicals, pharmaceuticals, and textiles.
Taking a stand: To fight the price-crushing from China and beyond, India has passed anti-dumping legislation under the amended Customs Tariff Act of 1995. This has authorized India to impose price-correcting duties on a wide range of products from different countries, including China, the UAE, the USA, and Malaysia. India's counter-dumping measures mark upon the principles of the World Trade Organization (WTO), which allows its members to take action against unfair pricing practices. The Directorate General of Trade Remedies (DGTR) spearheads these efforts by investigating dumping complaints and recommending appropriate levies to the government.
Types of Dumping
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Predatory dumping
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Sporadic dumping
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Persistent dumping
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Reverse dumping