India's overzealous anti-dumping response

For years, several countries, including India, have worried about imports of cheap Chinese goods undermining local industries.

- RAJESWARI SENGUPTA & NIHARIKA YADAV

These fears have grown in recent months due to rising United States-China trade tensions. As of June 16, the US has increased the effective tariff on Chinese imports to 55 per cent.

The higher costs of selling to the US have raised concerns that China will dump its surplus goods in other markets. In response, many countries, including India, are using trade remedies such as anti-dumping duties (ADDs) to protect themselves.

India is now the world's biggest user of ADDs—not only against China, but also other nations. While dumping is a real risk, India's heavy use of ADDs can create new problems, and hence, policymakers should apply them carefully.

In international trade, dumping occurs when a country sells goods abroad at prices lower than their fair market value. While the World Trade Organization (WTO) does not consider dumping unfair by default, it allows countries to impose ADDs if the practice causes "material injury" to local industries.

China has been the main target of ADDs, facing about 25 per cent of all anti-dumping investigations since it joined the WTO in 2001. India, on the other hand, is among a select few developing countries with a long history of liberal use of ADDs. From 1995 to 2023, India initiated over 1,100 investigations—more than the US or European Union—targeting not only China but also the EU, Switzerland, South Korea, Japan, and others. In 2024 alone, India launched 47 trade remedy investigations—37 aimed at Chinese products like aluminum foil, vacuum flasks, and steel.