Anti-dumping duties can save India $3 billion per year in forex: Report

A report by C-DEP and Centre for WTO Studies says implementing pending DGTR recommendations could reduce forex outflow and support domestic industry with limited inflationary impact

India can save $3 billion in foreign exchange annually if the Ministry of Finance imposes all the currently pending anti-dumping duty recommendations by the Directorate General of Trade Remedies (DGTR), according to a report by the Centre for Domestic Economy Policy Research (C-DEP) and the Centre for WTO Studies (CWS).

 

“The implementation of pending DGTR anti-dumping duty recommendations is estimated to yield approximately ₹28,540 crore ($3 billion) in annual foreign exchange savings,” said the report titled Impact of Anti-Dumping Duties in India, released on Tuesday.

 

An email query sent to the finance ministry remained unanswered till the time of going to press.

 

 

The recommendation assumes significance against the backdrop of India’s foreign exchange reserves depleting by over 5 per cent from the record high of $728.49 billion before the onset of the US-Iran war on February 28.

 

The non-implementation of anti-dumping duties on 56 DGTR-recommended products has resulted in an annual economic loss of ₹11,938 crore to the domestic industry, the report said.

 

“While India historically implemented nearly 99.5 per cent of DGTR’s anti-dumping duty recommendations until 2020, rejection and non-implementation rates have risen sharply in selected periods after that,” the report said. “During the same period, imports from China increased significantly across several industrial sectors,” it added.

 

The process for the levy of anti-dumping duty begins with the domestic industry sending representations to the DGTR, which undertakes an investigation to gauge injury to domestic companies due to cheaper imports of the represented product. The DGTR, based on the final findings, then recommends to the finance ministry the levy of the duty.

 

The report addresses concerns of inflation usually associated with anti-dumping duty, as the tariff primarily aims to curb cheaper imports and encourage domestic manufacturing and purchases at relatively higher prices.

 

The report examined 21 products where DGTR has already completed its investigation and issued recommendations, and where the final implementation decision is now pending with the Ministry of Finance. “The analysis finds that even under a 50 per cent cost pass-through assumption, the collective contribution of these 21 products to headline inflation is only in fractions of a basis point,” the report said.

 

Most of these cases concern intermediate inputs, industrial chemicals, fibres, polymers, and feedstock, which generally have low direct weight in the Consumer Price Index (CPI) basket, and any cost increase is further diluted through downstream processing, logistics, distribution margins, taxes, and substitution possibilities, the report mentioned.

 

The report also argues that India’s approach towards anti-dumping duty is “restrained and calibrated”, compared to that of other economies such as the US and China. Anti-dumping duties on certain products in the US exceed 600 per cent, and Chinese duties on some intermediates are over 160 per cent. “This highlights that India’s trade-remedy application is measured, targeted, and fully consistent with international best practices.”