Regulations Of Anti-Dumping In Post-Pandemic In India
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Category: General Law
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REGULATIONS OF ANTI-DUMPING IN POST-PANDEMIC
IN INDIA Namit Chaute, LLM (Corporate & Commercial Law) student at CHRIST (Deemed to be University) Pune Lavasa
ABSTRACT
The COVID-19 pandemic has brought a wave of protectionism across the globe, changing the world’s trade dynamics. Countries like India have increasingly used anti-dumping duties to shield their local industries against dumped imports. Dumping occurs when foreign producers sell goods in India at a price lower than the normal value, often below the production cost or domestic market price, and can affect local producers. Anti-dumping measures help to negate this act by imposing a duty on imported goods to reestablish fair play in competition. This paper undertakes a detailed analysis of the introduction and amendment of India’s anti-dumping rules in the postpandemic era.
It also makes recommendations for assessing the efficiency of India’s legal structure under the Customs Tariff Act, 1975, and the Anti- Dumping Rules, 1995 against international obligations under the Agreement on Anti-Dumping of the WTO. In this paper, the recent anti-dumping actions will be analyzed through case studies to assess the impact of legal measures on key sectors such as steel, chemicals, electronics, and pharmaceuticals that have been significantly affected by dumping in the post-pandemic trade environment. Keywords: Anti-Dumping Duties, Trade Protectionism, Customs Tariff Act, 1975, Post-Pandemic Trade, WTO Agreement on Anti-Dumping
INTRODUCTION
The COVID-19 pandemic strongly affected global trade and caused widespread breakdown across supply chains, international commerce, and the global economy. With the stringent lockdown, travel restrictions, and reduced demand for goods and services, countries across the world, including India, faced significant challenges in their trade environment. The pandemic not only impacts global trade but also impacts the structure of trade and economic relationships. The pandemic breaks down the global supply chain in the manufacturing sectors such as the electronic, pharmaceutical, and automotive industries. The world’s largest exporter China, being the first country hit by the pandemic, global trade in intermediate goods was severely impacted.
As production closed down in many countries due to the lockdown, there were delays in the delivery of raw materials and finished goods, leading to a ripple effect on international trade. This pandemic has declined trade volumes. The global trade saw a sharp difference in 2020. The World Trade Organization (WTO) predicted that global trade would fall by 5. 6% in 2020, depending on the duration and extent of the pandemic. Such as travel, tourism, and transport faced a massive decline in the ongoing pandemic and also increased the demand of trade in goods like medical supplies and essential items. India faced trade in import-export contraction, pharmaceutical and medical sector and also the pandemic impacted on small and medium enterprises.
During the pandemic, India shifted in trade policies and the Indian government responded to the crisis by adopting several policies to support the supply trade and economic recovery. These policies included Atmanirbhar Bharat (self-reliant India) initiatives to promote domestic manufacturing and reduce the dependence on imports, especially from China. India restricted exports of certain critical medical supplies during the pandemic, which were later relaxed as domestic production ramped up. The government also focused on the bilateral trade agreement and diversifying trade partnerships to reduce dependency on a few major economies.
OBJECTIVES
To Protect critical sectors essential for national security and public health by safeguarding domestic production capacity in pharmaceuticals, medical devices, and
technology. • To Prevent market disruption from artificially cheap dumped goods that could otherwise devastate key industries like manufacturing, agriculture, and technology. • To Preserve existing jobs and create new employment opportunities by ensuring domestic industries can compete fairly without facing artificially low-priced imports. Evolution of Anti-Dumping Legislation in India India's anti-dumping framework began in 1985 with the notification of the Customs Tariff (Identification, Assessment, and Collection of Duty or Additional Duty on Dumped Articles and for Determination of Injury) Rules1, which established the first formal mechanism to address dumping practices. These rules provided the foundation for identifying, assessing, and collecting duties on dumped articles while determining injury to domestic industries.
The legal architecture for anti-dumping in India draws from multiple sources, including Article VI of GATT 19942 and Sections 9A and 9B of the Customs Tariff Act, 19753. These sections, introduced through a 1982 amendment and implemented in September 1985, empowered the Indian government to impose Anti-Dumping Duties (ADD) when imports threatened or caused material injury to domestic industries4. Following the establishment of the World Trade Organization5 and the implementation of Article VI of GATT 19946, India updated its anti-dumping legislation to align with international obligations. The country repealed earlier rules and enacted new Customs Tariff Rules in 19957.
Further refinements came in 2012 with the "Refund of Anti-dumping Rules8," which created an administrative mechanism for refunding excess ADD payments beyond the actual margin 1 Tariff (Identification, Assessment, and Collection of Duty or Additional Duty on Dumped Articles and for Determination of Injury) Rules, 1985.
2 General Agreement on Tariffs and Trade 1994, art. VI.
3 The Customs Tariff Act, 1975, §§ 9A, 9B (India).
4 Lakshmikumaran & Sridharan Attorneys, A Monograph on Indian Anti-Dumping Law & Practice,
https://www.lakshmisri.com/Media/Uploads/Documents/INDIAN%20ANTI- DUMPING%20LAW%20&%20PRACTICE%20-%20A%20MONOGRAPH.pdf.
5 World Trade Organization, Official Website of WTO, https://www.wto.org/.
6 General Agreement on Tariffs and Trade 1994, art. VI.
7 General Agreement on Tariffs and Trade 1994, art. VI.
Directorate General of Trade Remedies, Countervailing Duty Rules, https://www. dgtr. gov. in/sites/default/files/DGAD_Countervailing_duty_rules_0. pdf. of dumping. The implementation of anti-dumping measures in India follows a two-tier structure: the Designated Authority within the Ministry of Commerce & Industry's Directorate General of Anti-dumping and Allied Duties9 conducts investigations and makes recommendations, while the Ministry of Finance10 holds the ultimate authority to impose the actual Anti-Dumping Duties.
The investigation’s overall framework: Final Findings Filling Application Levy of Provisional Duty (Rule 13) (Rule 5) (Rule 17) Levy of Final DUty Initiation Public Hearing (Rule 5) [(Rule 6(6) (Rule 18) Filling Quesionnaire Prelimnary Finding Responses (Rule 12) (Rule 6) "dumping" into the Indian market, the Indian government has been far more cautious when enforcing duties over the last three years13. Dumping occurs when foreign producers sell goods in an overseas market at prices below their normal value in the home country, creating unfair competition that can damage domestic industries. In India, the Directorate General of Trade Remedies (DGTR), functioning as a quasi-judicial body, has played a crucial role in addressing such practices.
Between 1991 and August 2020, the DGTR recommended anti-dumping duties in 1,039 cases, with the government accepting these recommendations in all but seven instances. This extraordinarily high acceptance rate of 99. 3% (or just 0. 7% rejection rate), as documented by the Centre for Digital Economy Policy Research14, reflects India's historically strong stance on protecting domestic industries from unfair trade practices through consistent implementation of antidumping measures. However, that part of the recommendations by the DGTR has been seen to be rejected by the finance ministry increasingly in the wake of the arrival of the COVID-19 pandemic and the launch of the Atmanirbhar Bharat campaign15 by the government. Since then, the "success rate" of DGTR recommendations has gone down to 43 percent, as only 61 of 141 suggestions accepted since August 2020.
Imports from China still face the harshest anti-dumping action measures. About 43 of 80 rejected cases came from China, which include carbon black, caustic soda, flat rolled stainless steel products, viscose spun yarn, and polyester yarn. Among the rejected anti-dumping recommendations, China featured prominently, accounting for 29 percent of cases where products originated exclusively from that country. The 23 rejected Chinese products included significant industrial and pharmaceutical items such as tires, amoxicillin (an essential antibiotic)16, melamine (used in various manufacturing processes)17, and nylon tire cord fabric (a key component in tire production)18. 13 Business Standard, India’s Anti-Dumping Duty Impositions Drop amid Post Covid-19 Shift, (Aug. 9, 2023), https://www. business-standard.
com/economy/news/india-s-anti-dumping-duty-impositions-drop-amid-postcovid-19-shift-123080900314_1. html.
14 Centre for Development Policy & Research, C-DEP, https://c-dep.org/.
15 Invest India, Atmanirbhar Bharat Abhiyaan, https://www.investindia.gov.in/atmanirbhar-bharat-abhiyaan. National Center for Biotechnology Information, Amoxicillin: An Aminopenicillin, https://www.ncbi.nlm.nih.gov/books/NBK482250/#:~:text=primary%20care%20setting.
17 Encyclopedia Britannica, Melamine, https://www.britannica.com/science/melamine.
18 Century Enka Ltd., Nylon Tyre Cord Fabric, https://www.centuryenka.com/product/nylon-tyre-cordfabric.html.
The government's rationale for these rejections typically centers on economic concerns - specifically imposing duties on intermediary goods and raw materials could increase production costs for finished products, potentially making Indian manufactured goods less competitive domestically and internationally. Yet this policy approach lacks uniformity, with the Finance Ministry and Niti Aayog (the government's primary policy think tank)19 applying different standards across various sectors and products. Industry experts present a contrasting perspective, warning that allowing continuous dumping creates an existential threat to domestic manufacturers.
They argue that while short-term consumer benefits might come from lower prices, the long-term consequence could be the elimination of domestic producers from the market entirely, leaving India dependent on foreign suppliers and vulnerable to future price manipulation. The present COVID-19 pandemic has affected the import-export business worldwide and narrowed free trade among nations20. World Trade Statistical Review 2019 reports21 that among the Asian developing economies, India has been playing increasingly more significant roles along the value chain of global production in international trade. The impact of COVID-19 on India's trade has been about 348 million dollars and India features in the list of 15 most affected economies of the world according to the United Nations Report22.
International trade having been curtailed, it's a right time to promote indigenous products and producers and increase domestic production by the theory of protectionism23. The theory of Protectionism provides an opportunity to increase exports and reduce imports by creating various barriers so that domestic industries could get a fair chance to fight with international products and services. Until the 1990s, India was a protectionist country. However, India threw open its market for global trade in the late 20th century as part of the
19 NITI Aayog, Official Website, https://www.niti.gov.in/.
20 Vanshika Chansoria & Raj Aryan, Impact of COVID-19 on International Trade in India, Centre for Business & Commercial Law (NLIU Bhopal), Jan. 6, 2021, https://cbcl.nliu.ac.in/trade-law/impact-of-covid-19-oninternational-trade-in-india/.
21 World Trade Organization, World Trade Statistical Review 2019,
https://www.wto.org/english/res_e/statis_e/wts2019_e/wts2019_e.pdf. 22 United Nations Department of Economic and Social Affairs, World Economic Situation and Prospects 2024, https://desapublications.un.org/publications/world-economic-situation-and-prospects- 2024#:~:text=Global%20economic%20growth%20is%20projected.
23 Investopedia, Protectionism,
https://www.investopedia.com/terms/p/protectionism.asp#:~:text=Protectionist%20policies%20place%20specifi c%20restrictions.
Liberalisation, Privatisation, and Globalisation (LPG) model24. COVID-19 spread in all the major countries of the world, and this factor reduced trade effects across the globe. It unknowingly or knowingly led the countries to use their domestic products due to a reduction in trade. The point to be noted here is whether developing countries like India are geared up to face such COVID-19 challenges and to use domestic products. The theory of protectionism can be enforced in various ways: • Impose heavy taxes on imports from other countries. • A restriction on commodities to be imported. Covid-19 has impacted world trade and the scenario for 2020 stands at a reduction of 32%. To tackle this new development, the Indian government has taken a few initiatives to mitigate the losses in the economy and support trade.
The government of India has encouraged the production of Active Pharmaceutical Ingredients in India and allowed scale-up for import and export for future manufacture in an incentive scheme of Rs 10,000 crore. To fortify MSMEs25 and to provide income support to the poor sections, economic packages have been introduced. Monetary authorities have added measures in the form of liquidity measures to this effort. Here customs clearance is allowed 24x7 and Foreign Trade Policy26 has been extended for a year to ease international trade. Even relaxations in documentation and compliance have been offered under the duty-free import schemes and certificates. Retrospective issuance of an online platform to issue all certificates for trade agreements and export products has also ruled out the possibility of trade disruption by the government through physical requirements of a certificate of origin.
In Standard Retail Pvt. Ltd. vs. M/s. G. S. Global Corp27, the Bombay High Court held that steel is a statutorily declared essential commodity, which cannot be locked out of trade, even in lockdown, and contractual obligations, including payment, cannot be defeated. This
24 Vedantu, Introduction to LPG, https://www.vedantu.com/commerce/introduction-to-lpg.
25 Ministry of Micro, Small & Medium Enterprises (India), Official Website, https://msme.gov.in/.
26 Directorate General of Foreign Trade (India), Foreign Trade Policy, https://www.dgft.gov.in/CP/?opt=ftpolicy.
27 Legal Aid Blog (DNLU), Standard Retail Pvt. Ltd. v. S.M.S. Global Corp. & Ors., (June 29, 2020),
https://legalaiddnlu. wordpress. com/2020/06/29/standard-retail-pvt-ltd-v-s-m-s-g-s-global-corp-ors/. amendment allows Indian companies to directly list their securities on some foreign markets, thus unlocking more capital that would promote more investments in particular startups. Challenges in Post-Pandemic Anti-Dumping Enforcement: The DA may launch an investigation upon receiving a written application from the domestic industry or on its behalf. Additionally, if the DA is convinced by the information provided by the Commissioner of Customs or any other source that there is sufficient proof of dumping, harm, and a causal connection to support the opening of an investigation, it has the Suo moto authority to do so. The terms are comparable to those found in the AD Agreement.
The domestic industry is expected to use the "Application Proforma"28 that the DA has mandated for submitting its application. 29 The government also publishes trade notices outlining the requirements for submitting an appropriate application. Among other things, the application must be backed up by data about injuries, dumping, and causal relationships. Without measuring the quality and sufficiency of the evidence, the DA is unable to launch an investigation. Additionally, the DA must make sure that there is enough proof of dumping, harm, and a causal connection to support opening an inquiry. To clarify, the DA may also send deficiency letters asking for clarification or more details as needed. When the investigation is started, the DA establishes the duration of the inquiry.
For the POI, the normal value, export price, resulting dumping margin for the exporters, and injury margin are established. The POI's duration changes depending on the circumstances. Six months to eighteen months is the range. The choice of a suitable POI has the potential to completely alter the course of an inquiry. Historical facts prior to the point of incidence are only important to the extent that they may aid in trend analysis; developments after the point of incidence are irrelevant. In two situations, the "like product"30 becomes significant in an anti-dumping inquiry. The 28 Directorate General of Trade Remedies, Anti-Dumping Application Proforma, https://www. dgtr. gov. in/antidumping-guidelines/anti-dumping-application-proforma.
29 Lakshmikumaran & Sridharan Attorneys, A Monograph on Indian Anti-Dumping Law & Practice,
https://www.lakshmisri.com/Media/Uploads/Documents/INDIAN%20ANTI DUMPING%20LAW%20&%20PRACTICE%20-%20A%20MONOGRAPH.pdf. Oxford Public International Law, Anti-Dumping Agreement Overview, https://opil.ouplaw.com/display/10.1093/law:epil/9780199231690/law-9780199231690-e1756.
PUC's export price is first compared to the typical value of a similar product in the exporting nation in order to calculate the dumping margin. Second, the phrase "like product" refers to similar items made by the domestic industry in order to determine material harm to the importing country's domestic industry. Therefore, determining the dumping margin and determining whether there has been serious harm to the domestic industry depends heavily on the concept of "like product. " Although identifying similar products to determine the dumping margin has not yet been a problem in India, this idea has become crucial in determining material harm. For the sake of convenience, it can be asserted that imported items that are not covered by the PUC cannot be considered to be inflicting significant harm. domestic business.
Regarding this, importers and exporters have contended that the DA's assessment of a "like product" was inaccurate. Since the duty cannot be applied above the margin of dumping, the margin of dumping analysis is one of the fundamental pillars of the antidumping investigation. In general, the difference between the export price and the PUC's regular value is known as the "dumping margin. The local cost of a comparable product in the nation that exports. " The price of a similar commodity when exported to any third country, if no domestic price is set. It can be demonstrated that the aforementioned domestic price is within the normal flow of trade.
• The country selected must be a suitable third country, and the export price must be indicative; or • The product's cost of manufacturing in the nation of origin plus a fair addition for profit, general, and administrative expenses as well as for selling. Recent Anti-Dumping Cases and Sectoral Analysis: In response to suggestions from the Directorate General of Trade Remedies (DGTR)31, the government imposed anti-dumping duties on welded stainless-steel pipes and tubes imported from Vietnam and Thailand. The five-year duty ranges from $246 to 307 per metric tonne, contingent on the producer and the nation of origin. 31 Economic Times, Anti-Dumping Duty Imposed on Welded Stainless Steel Pipes & Tubes, (Mar. 7, 2024), https://economictimes. indiatimes. com/industry/indl-goods/svs/steel/anti-dumping-duty-imposed-on-weldedstainless-steel-pipes-tubes/articleshow/114990945. cms? from=mdr.
The findings of the DGTR indicate that welded stainless steel pipes and tubes from the nations under investigation were imported into India at "dumped prices and the domestic industry has suffered injury" as a result of these imports. The imports from April 2022 to March 2023 were the subject of the investigation. The most important aspect is that all Thai steel producers—aside from I Stainless Steel Co. Ltd. —have been subject to a levy of $246 per metric tonne. However, a $307 per metric tonne tariff has been imposed on Vietnamese steel producers, except for Sonha SSP & Steel 568 Co. The Delhi-based Stainless-Steel Pipe and Tubes Manufacturer Association and the Gujaratbased Stainless-Steel Pipe & Tubes Manufacturers Association filed a complaint in response to the DGTR's anti-dumping probe. About 40 local producers of pipes and stainless steel provided information for the study.
The latter made up half of India's output. The international steel manufacturers argued that the items in question should not be included in the study since they were certified by the American Society of Mechanical Engineers: Bioprocessing Equipment (ASME-BPE) and were unavailable in India. In the previous year, further antidumping cases were brought, including: • Chinese Tenacity Polyester Yarn • China's Flat Base Steel Wheels; • China's Zeolite 4A (Detergent Grade); • China, Indonesia, Japan, Korea, Taiwan, Thailand, and the US PVC Suspension Resins • A master batch of calcium carbonate filler from Vietnam; • some Chinese cranes; and • polytetrafluoroethylene (PTFE) from Russia and China.
In response to complaints from six domestic PCB manufacturers, represented by the Indian Printed Circuit Association, about low-priced incoming shipments from China and Hong Kong, the Ministry of Commerce has suggested imposing a five-year, 30% anti-dumping duty on bare PCBs, a basic component of any electronics product. According to an industry official who wished to remain anonymous, "the ADD charged on imported PCBs raises the cost of production of domestically manufactured PLI scheme products, which in turn repositions them as less competitive in the world market. " According to ET executives surveyed, the cost impact of the ADD is projected to be 2-3% for telecom items32, 1% for IT hardware products, and 3-4% for lighting products.
As part of the localization timeline of the updated IT hardware PLI plan, companies who have already adopted domestic PCB assembly—where parts like transistors and resistors are put on top of the bare PCB will find this to be particularly challenging. The study mainly examines the involvement of China and India in the production and trade of antibiotics. Anthropological study frequently looks at the social, political, and economic factors that influence the manufacturing and use of antibiotics as well as associated problems such global supply chains, healthcare disparities, and antimicrobial resistance (AMR). The prescription and usage of antibiotics have received a lot of scholarly attention, but the production of these medications and the international trade networks that regulate antibiotic components made in China and India have received much less33.
Despite being the greatest producer and exporter of antibiotic ingredients in the world, China is largely dependent on India and is not particularly interested in turning these components into consumable medications. Seventy to eighty percent of India's antibiotic components are imported from Chinese vendors. Nonetheless, the two nations are dependent on each other in the global supply chain for antibiotics on a competitive basis. Indian firms are filing antidumping charges against Chinese products to have them protected in their home markets as a result of the increased competition in this market. Global capitalism, neoliberal policies toward free trade, and historical changes in the pharmaceutical industry—specifically, outsourcing to China and its effects on the overall costs of producing antibiotics and their supply chains—are the categories under which this section
32 Economic Times, PCB Dumping Duty Hits IT Hardware Manufacturing Under PLI, (Sept. 26, 2023),
https://economictimes.indiatimes.com/industry/cons-products/electronics/pcb-dumping-duty-hits-it-hardwaremaking-under-pli/articleshow/111093438.cms.
33 Mingyuan Zhang & Lise Bjerke, Medical Anthropology Quarterly, (2023),
https://anthrosource. onlinelibrary. wiley. com/doi/10. 1111/maq. 12757. belongs34. Proposed Reforms and Policy Recommendations The "like product" is discussed under anti-dumping investigation, emphasizing the inconsistent meaning assigned by different authorities. Like product refers to that product which is either identical to or most similar, to the product under investigation. Significantly though, the definition throws open the door to allow greater discretion to be exercised by the authorities in framing the scope of anti-dumping cases. It compares how EC treated polyester staple fibers PSF with how the U. S. Department of Commerce handled PSF. EC groups all PSF types as one "like product", while the US excluded certain types such as PSF used in carpets from its investigation.
Such a distinction in the definition of "like product" is a red flag of inconsistent application of the "like product" standard. Other inconsistencies also arise from the different EC decisions, an example being the decision in Footwear from China and Indonesia which relied on a "two-way interchangeability" test. The test was whether the goods could substitute each other based on physical characteristics, the end-use, and consumer perception of interchangeability. It determined that slippers would replace outdoor shoes when used indoors but not vice versa. Applying the same test to other products, like PSF and Steel Wire Ropes, shows that, though there might be a substitutability possibility of lower-specification by higher-specification versions, physical differences, differences in performance, and price differences generally make these commercially not feasible.
There are some of the key principles that must guide anti-dumping investigations in the context of WTO rules. First, only serious anti-dumping petitions should lead to proceedings, as these are complex and distortionary to trade. Second, anti-dumping petitions by domestic industries to harass exporters should be restricted to ensure fair competition in practice. Third, legal certainty requires stricter standards of review for the information provided in petitions to prevent overly permissive interpretations by authorities.
34 Konstantinos Adamantopoulos & Diego De Notaris, The Future of the WTO and the Reform of the Anti-
Dumping Agreement: A Legal Perspective, Fordham Int'l L.J.
& (2000), https://ir.lawnet.fordham.edu/cgi/viewcontent.cgi?article=1729&context=ilj.
Needless to say, less than adequate investigations under the guise of anti-dumping procedures are a greater burden on developing countries. Developing countries must be given opportunities to present their dumping cases before formal proceedings may commence. The proposed reforms include provisions to avoid harassment and stimulate pre-consultations as well as lighten the burden on developing countries. Some of the legal changes to the anti-dumping procedures include: • Sunset requirement Anti-dumping duties normally lapse after five years, unless review shows that the end of the measure would lead to injury. • Public notice Authorities must serve public notice of the commencement of investigations, preliminary and final determinations, and undertakings. The notice must include non-confidential information on parties, products, and reasons for the determinations.
• Evidence collection The government authorities must give a copy of the written application in full text to all known exporters. The parties interested in it must be offered access to non-confidential information and an opportunity to meet with the opposing parties. • Investigation time It must conclude investigations within one year unless there are special circumstances • Committee on Anti-dumping Member countries should inform the Committee on Anti-dumping Practices about all preliminary and definitive anti-dumping measures. The committee provides an avenue through which the members may raise and address related questions and concerns.
Conclusion
Due to the COVID-19 pandemic, India's trade policies along with its anti-dumping measures have undergone radical policy changes. It instead emphasized more autonomy in critical sectors, particularly pharmaceuticals, by providing incentives for domestic API production to shift away from imports from China. India also extended the Foreign Trade Policy for a year to cushion the impact of the pandemic that was severely disrupting enterprises. Meanwhile, the anti-dumping action was strengthened against imports from China, including steel and pharmaceuticals, to safeguard the domestic industries. The Aatmanirbhar Bharat initiative went further in the encouragement of local manufacturers and helped in building up the resilience of supply chains of essential goods.
Further research would recommend assessing the long-term consequences of India's anti-dumping policies on India's trade relations with China and assessing compliance with rules agreed upon by WTO.