Ashraf Engineer
May 3, 2025
EPISODE TRANSCRIPT
Hello and welcome to All Indians Matter. I am Ashraf Engineer.
As trade tensions continue across the globe, India can’t afford to let down its guard. When President Donald Trump kept in force tariffs against China while pausing them against other countries, many experts warned that Chinese exporters could divert goods into markets like India at sharply reduced prices. In other words, dump their goods here and thus hurt domestic manufacturers.
Indeed, in March, India imposed anti-dumping duties on five Chinese goods to protect domestic industries from the impact of cheaper imports. Among the products India imposed anti-dumping duties on were soft ferrite cores, vacuum insulated flasks of a certain thickness, aluminium foil, trichloro isocyanuric acid and poly vinyl chloride paste resin. All of these, it was found, were being exported to India from China at sub-normal prices. The duties imposed ranged from $873 per ton to $1,732 per ton.
So, what exactly is the dumping of goods and how does it affect the Indian economy?
SIGNATURE TUNE
Anti-dumping probes are conducted to determine whether domestic industries are being hurt by a surge of cheap imports. India took action against the Chinese imports on a recommendation from the Commerce Ministry’s investigation arm, the Directorate General of Trade Remedies.
A product is considered to be dumped when the producer exports it at a price lower than its value in its own domestic market.
The anti-dumping duties are allowed as per the World Trade Organization, or WTO, rules that aim to ensure fair trading practices and a level-playing field for domestic producers. The WTO describes dumping as “a situation of international price discrimination”.
The WTO is a global body that deals with the rules of trade. Its rules include international regulation of anti-dumping measures, focusing on how governments can — or cannot — react to dumping. Such reactions must be justified in order to uphold WTO commitments.
Typically, anti-dumping action means charging extra import duty on a product from an exporting country in order to negate the damage to industry in the importing country.
China is India’s second largest trading partner and New Delhi has in the past flagged serious concerns over the widening trade deficit with it. The deficit stood at $85 billion in 2023-24.
To establish that a product is being dumped, prices of the same goods are compared in both markets. In practice it is, of course, somewhat more complex than that. In most cases, countries undertake complex analytical steps to determine the appropriate price in the market of the exporting country (known as ‘normal value’) and the appropriate price in the importing country (known as the ‘export price’).
According to the Directorate General of Trade Remedies, the ‘injury’ to domestic businesses is analysed in terms of the volume effect and price effect of the dumped imports.
So, anti-dumping duties are a protection a government imposes against foreign imports that are priced below fair market value. Such products have the potential to undercut local businesses and the economy.
Dumping is a controversial issue across the world. Manufacturing powerhouses, such as China, have long been accused of lowering prices unsustainably through cheap labour costs, government subsidies and other benefits. As a result, companies in markets China exports to cannot compete and often it can lead to businesses shutting and jobs being lost.
Of course, there are downsides too to anti-dumping measures. The duties can lead to higher prices for domestic consumers and they have the potential to distort the market. In a free market, governments should not normally determine what is a fair price for any good or service.
India anticipated a rise in dumping when Trump first announced tariffs and began considering a multi-pronged mechanism in response. This included norms for imports, including enforcement of quality controls for Chinese goods. There was also an inter-ministerial group to oversee the issue and take action when needed.
As the drama over Trump’s tariffs, their pausing and further developments unfolds, policymakers warn that China may reroute more exports to India.
For now, India has taken the first steps to protect domestic industries and it’s likely that more will follow. India’s relationship with China is edgy and tensions at the border over the years haven’t helped. As economic rivals, they keep a wary eye on each other. US pressures will force China to look at new markets and dumping goods in India would seem a likely step for it. India will need to stay vigilant to ensure its own industries aren’t harmed in the process.
Thank you all for listening. Please visit allindiansmatter.in for more columns and audio podcasts. You can follow me on Twitter at @AshrafEngineer and @AllIndiansCount. Search for the All Indians Matter page on Facebook. On Instagram, the handle is @AllIndiansMatter. Email me at editor@allindiansmatter.in. Catch you again soon.
