Warning against overprotection

BS Reporter / New Delhi July 03, 2009, 0:47 IST

'Need to guard against protectionist measures by trading partners'.

Recognising that India has initiated the largest number of anti-dumping investigations in 2008, the Economic Survey has suggested the government go slow on this and other protectionist measures.

Quoting World Trade Organisation (WTO) statistics, the survey noted that in 2008, India initiated 53 anti-dumping cases, about a fourth of all such investigations launched world wide.

Dumping is said to occur when the cost of imported goods is lesser than the price at which it is sold by the overseas manufacturer in their domestic market. Dumping leads to cheap imports, adversely impacting the domestic industry of the importing country.

“While efforts to promote exports are needed, there is a need to guard against protectionist measures originating from our trading partners. We also need to desist from any protectionist tendencies and proceed on reform path,” the survey noted.

WTO norms mandate that the importing country has to investigate allegations of dumping and if it is proven, can impose an additional import duty on the product.

Dumping of goods is usually seen when demand for the product in the producing country comes down. In such a scenario, producers in those countries sell their products at cheap rates in overseas markets. The ongoing economic crisis has dampened domestic demand in many countries.

Anti-dumping measures launched by India have mostly been in the chemicals and metal sectors. Producers from countries that are being investigated include China, Thailand, the European Union and Russia, among others.

The survey also notes non-tariff measures launched by India’s trade partners to protect their own domestic companies. These measures include subsidies, stringent technical regulations and standards. “If these Non Tariff Measures (NTMs) coming with greater vigour in new forms are not nipped in the bud, it could lead to retaliatory NTMs,” the survey noted.