Commerce ministry starts anti-subsidy countervailing measures

The ministry to have implications for all imports from countries with free market economy

The commerce ministry has started with a new trend of implementing anti subsidy countervailing measures in the form of anti subsidy countervailing duty which is expected to slowly replace anti dumping duty for imports of most countries with free market economy.

India for the first time imposed anti subsidy countervailing duty on imports of castings for wind turbine generator from China. According to official sources, the change in stance shifting from anti dumping duty to anti subsidy countervailing duty arises since China is slated to be a market economy from 2016.

The United States and European Union have already started slapping anti subsidy duty as anti dumping is an ineffective measure for a closed government controlled economy as authenticity of most of the data in such a country is difficult to cross check and arrive at the normal value for imposing the anti dumping duty.

On the other hands, China uses a lot of subsidies for boosting exports. Therefore the stance has changed from imposing anti dumping duty to anti subsidy countervailing duty.  Further there is also a proposal to impose anti subsidy duty on generators imported from China and which are also manufactured by Bharat Heavy Electric Ltd (BHEL)domestically.

While objective of both - antidumping duty and anti subsidy countervailing duty are same, that is to protect the domestic industry from cheap and undervalued imports, the element of duty is different. Dumping is said to occur when the goods are exported by a country to another country at a price lower than its normal value which is an unfair trade practice and for which anti dumping duty is imposed. 

Therefore the market price in comparison to domestic prices and international prices are the only consideration. On the other hand, anti subsidy countervailing measure is imposed in the form of countervailing duty if there is a subsidy involved in export of a commodity or subsidy relates to export performance, or relates to the use of domestic goods over imported goods in the export article or the subsidy has been conferred on a limited number of persons engaged in manufacturing, producing or exporting the article. While price considerations remain in anti subsidy duty as well, components are assessed.

Explaining this, official sources said, unlike antidumping duty which is determined primarily on fair price considerations, anti subsidy duty is imposed if there is an element of subsidy. They added, henceforth, ant subsidy countervailing duty will be more prevalent as pure price considerations based on the date provided by countries is difficult to verify once they are certified by their respective governments. On the other hand, subsidy is easy to check and disclosures have to be given by governments.

Meanwhile, the decision of Directorate general of Anti dumping and allied duties to imposed anti dumping duty on solar cells imported from the United States, China, Taiwan and Malaysia has taken a legal turn. First Solar Inc, one of the world's largest solar-panel manufacturers, has approached Delhi High Court to reverse the government recommendation.

At present, the recommendation is a DGAD suggestion which has to be finally ratified by the ministry of finance. Local manufacturers claim that the imports were being priced below cost and were hurting Indian solar-cell makers.