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India starts Anti-Dumping probe against China’s Aluminium Foil
India’s Anti-Dumping Probe on Aluminium Foil from China
In last week of March 2024, India has initiated an anti-dumping probe into the import of aluminium foil from China. The investigation was launched following a complaint by the India’s domestic industry, which alleged that aluminium foil used as a packaging material for conservation and preservation of edible and food products, from China was being dumped into the Indian market at prices below the normal value.
Why Has India Initiated an Anti-Dumping Probe on Chinese Aluminium Foil?
India has initiated an anti-dumping probe on Chinese aluminium foil imports due to a surge in low-cost imports that have allegedly caused material injury to Indian manufacturers. The key reasons behind this move are:
- Price undercutting and suppression: Domestic industry players, such as Hindalco Industries, claim that the dumping of Chinese aluminium foil has led to price undercutting and suppression.
- Impact on profitability and market share: The alleged dumping has affected the profitability and market share of Indian producers.
- Application by Indian companies: The probe was initiated based on an application filed by several Indian companies, including Hindalco Industries, Shyam Sel & Power Ltd, Shree Venkateshwara Electrocast, Ravi Raj Foils, GLS Foils Product, and LSKB Aluminium Foils.
What is Anti-Dumping?
Anti-dumping refers to the practice of exporting a product at a price lower than the price normally charged in the exporter’s domestic market, or below the cost of production. This practice is considered unfair trade and can harm domestic industries in the importing country.
Why is Anti-Dumping Important?
Anti-dumping measures are important because they:
- Protect domestic industries from unfair competition
- Level the playing field in international trade
- Prevent material injury to domestic manufacturers producing similar products
How Do Anti-Dumping Measures Work?
When a country suspects that imported goods are being dumped, it can launch an investigation. If dumping is confirmed and proven to cause material injury, the importing country may impose anti-dumping duties on the goods in question. These additional duties aim to bring the price of the imported goods closer to their normal value, thus reducing the unfair advantage of the exporting country.
How Does India Implement Anti-Dumping Measures?
India’s legal framework for anti-dumping investigations is governed by the Customs Tariff Act and the Directorate General of Trade Remedies (DGTR), which is the investigating arm of the commerce ministry. The process of implementing anti-dumping measures in India involves several steps:
- Complaint filing: Domestic industry players must file a complaint with the DGTR, providing evidence of dumping, injury, and a causal link between the two.
- Investigation: The DGTR initiates an anti-dumping probe to thoroughly examine the alleged dumping and its impact on the domestic industry.
- Imposition of duties: If the allegations are substantiated, the investigation can result in the imposition of anti-dumping duties on the imported product.
What are the Potential Impacts of the Anti-Dumping Probe?
The potential impacts of the anti-dumping probe on Chinese aluminium foil imports are:
- Imposition of anti-dumping duties: If the DGTR’s investigation confirms material injury to the domestic industry due to dumping, it may recommend the imposition of anti-dumping duties on the imported product. The final decision to impose such duties rests with the finance ministry.
- Relief for Indian manufacturers: The imposition of anti-dumping duties could provide relief to Indian manufacturers by creating a more level playing field and reducing the impact of low-cost Chinese imports.
- Implications for India-China trade relations: The move may have broader implications for India-China trade relations, as it could be seen as a protectionist measure by the Chinese government.
Historical Context of Anti-Dumping Measures in India
India has a long history of using anti-dumping measures to protect its domestic industries from unfair trade practices. Here are some key points about India’s anti-dumping history:
- India has initiated numerous anti-dumping investigations over the years, targeting imports from various countries, including China, South Korea, and the United States.
- One notable case was the imposition of anti-dumping duties on Chinese steel products in 2017, following complaints from Indian steel manufacturers about the dumping of low-cost Chinese steel.
- The effectiveness of anti-dumping measures in India has been a subject of debate:
- Some argue that they have helped protect domestic industries.
- Others claim that they have led to higher prices for consumers and reduced competition.
Global Perspective on Anti-Dumping Measures
India is not alone in its use of anti-dumping measures, as many countries around the world use such actions to protect their domestic industries. The approach and implementation of anti-dumping measures vary across countries.
Differences in Anti-Dumping Approaches
- The United States has been known to impose significantly higher anti-dumping duties compared to other countries. The average U.S. initial anti-dumping duty rate for the 1990-1994 period was 56.2%, which was higher than most other countries.
- The European Union tends to have a more balanced approach. The EU may also choose to impose duties at a level lower than the dumping margin if this level is adequate to remove injury, known as the ‘lesser duty rule’, which helps avoid duties that are excessively high.
Controversy Surrounding Anti-Dumping Measures
The use of anti-dumping measures has been a contentious issue in the international trade community:
- Some argue that they are necessary to ensure fair competition.
- Others claim that they are often misused as a protectionist tool.