The commerce ministry has announced that the Directorate General of Trade Remedies (DGTR) initiated an anti-dumping inquiry against the import of solar cells from China, Thailand and Vietnam. The inquiry was triggered by an application by the Indian Solar Manufacturers’ Association (ISMA). The inquiry will cover the period from July 2019 to December 2020.
Solar cells are the basic element used in the manufacturing of solar modules and Chinese products are 15-20% cheaper than their Indian counterparts.
Earlier, a similar anti-dumping investigation against the import of solar cells from China, Malaysia and Taiwan was initiated by the Indian government in July 2017 but was eventually called off in March 2018 on ISMA’s request. But to support local manufacturing, the central government had imposed a 25% safeguard duty on solar imports from Malaysia and China in July 2018 for 2 years, which was extended to July 2021, at the rate of 15%.
What is Anti Dumping Duty?
Anti-dumping duty is a tariff, forced on imports manufactured in other countries which are priced below the fair market value of similar goods in the domestic market. The government imposes anti-dumping duty on imports when it believes that the products are being “dumped” – through the low pricing – in the local market. Anti-dumping duty is imposed to defend local businesses and markets from unfair competition by imports.
Why countries carry out dumping probe?
Dumping impacts the price of the product in the importing country, it reduces the margins and profits of manufacturing firms. It also changes the dynamics of the domestic market. The domestic manufacturer feels the pressure of low prices provided by the foreign countries. Low prices of products or dumped products can lead domestic manufactures into bankruptcy. To tackle these issues countries impose anti-dumping duty on imported products.
Role of the WTO in Regulating Anti-Dumping Measures
The World Trade Organization (WTO) plays an important role in the regulation of anti-dumping actions. As an international body, the WTO does not regulate firms involved in dumping activities, but it holds the power to regulate how governments respond to dumping activities in their territories.
Imposition of anti-dumping duty is permitted under the World Trade Organization regime. According to WTO norms, a country is allowed to impose tariffs on such dumped products from other countries to provide a level-playing field to local manufacturers.
Government’s actions to protect the domestic market
To protect India’s domestic market, the Government of India takes continuous action against countries that dumped their products in the Indian market. Currently, India is the largest user of anti-dumping measures among WTO members. During 2015-19, India initiated 233 investigations, while in 2011-14 total 82 investigations initiated.
Most of the investigations initiated against China, followed by the Republic of Korea and the European Union. India had imposed 254 anti-dumping duties mostly on chemical products till the end of 2019.