- Why Anti-Dumping Duty on Chinese Cutting Tools?
- What is Dumping?
- What is the problem if the dumping doesn’t affect the producing country?
- If it affects the economy then lower the prices of domestic goods!!! – Isn’t that what you just thought?
- Then how does the producing country sell it at a lower price?
- Anti Dumping Policy- What is Anti-dumping action?
- Why is anti-dumping duty recommended in India?
Why Anti-Dumping Duty on Chinese Cutting Tools?
What is Dumping?
When a corporation sells a product at a lower price than it ordinarily charges in its native market, it is referred to as “dumping” the goods.
Country A sells an electronic gadget.
Let’s take a laptop that is manufactured in country A itself and sells it for 60,000 but when country A exports it to country B and sells it to country B in 45000 or less than the price it sells the product in its home country and not just a few but in large numbers.
This is dumping which means country A is dumping its product in country B.
What is the problem if the dumping doesn’t affect the producing country?
As the producer country sells its product at a lower price, the consumers from the buying country start buying it from them due to which the products of the buying country lose their value and it affects the economy.
If it affects the economy then lower the prices of domestic goods!!! – Isn’t that what you just thought?
Yes obviously we can do that but it similarly affects the economy because the production costs are high and if the prices are lowered the profits will be equal to none.
Then how does the producing country sell it at a lower price?
Yes they will sell at a very low price at first but once the consumer gets used to it they will increase the price. They sell their goods at a very high price after observing the suitable market conditions.
Then you must be thinking that the people can buy domestic goods after the other country hikes the prices but till the time the prices of the other country are not in great condition and there is not enough capital to make new goods so it becomes very challenging to enter back into the market.
If such situations arise where the imported goods have relatively very high demand due to the low prices then the home country takes anti-dumping actions.
Anti Dumping Policy– What is Anti-dumping action?
- An anti-dumping action means charging extra import duty on the particular product from the particular exporting country in order to bring its price closer to the “normal value” or to repair the harm done to the importing country’s local industry
- To ensure fair trade and give the domestic industry an equal playing field, anti-dumping measures are implemented. This anti dumping policy does not aim to limit imports or drive up the price of goods unnecessarily.
“Definitive anti-dumping duty…is recommended to be imposed for five years…,” The Directorate General of Trade Remedies (DGTR) has said in a notification.
Why is anti-dumping duty recommended in India?
Anti-dumping duty is to protect the domestic industry from cheap inbound shipments.
The recommended duty was in the range of USD 78.38 per tonne and USD 90.12 per tonne on imports.
While the commerce ministry’s DGTR advises the duty, the ministry of finance takes the ultimate decision to impose it within three months.
According to Anti Dumping policy India For which goods is anti-dumping duty recommended?
Anti-dumping duty is recommended on dumped imports of ‘resin bonded thin wheels’.
It is utilised in several industries, including cutting and welding. The directorate in its findings has concluded that the item is being imported from China into India in significant quantities in both absolute and relative terms. The imports are undermining the native industry’s prices. Therefore the Indian government is imposing an Anti-Dumping Duty on Chinese Cutting Tools.