The Objective of Anti-dumping Safeguard Duty in India

Anti-dumping duty is one of the most commonly used trade remedies in India. But what exactly is the Anti-dumping Safeguard duty and how can it be used by a business to protect its domestic market?

Anti-dumping duty is a special charge imposed on imported goods by the government of India. Anti-dumping duties are imposed on goods that have been exported to India at prices lower than their normal value or cost. This allows an Indian manufacturer protection from cheaper foreign goods entering the country.

The Anti-dumping Act, which came into effect in 1983 and is administered by the Ministry of Commerce, permits the imposition of Anti-dumping Safeguard duty.

Duties are imposed on goods imported into India only after an investigation shows that the dumped goods are being supplied to the Indian market at a lower price than the home market, causing injury to domestic producers.

While a petition for the imposition of Anti-dumping Safeguard duty is pending, the Director General of Foreign Trade (DGFT) has been empowered to initiate investigations on his own initiative also. If a preliminary inquiry suggests dumping, then an investigation is conducted for confirming it.

Anti Dumping Duty is one of the important duties levied by the Government on the importation of goods into India. It is used to protect domestic industry from injury caused by the dumping of goods sold at below-fair prices by foreign companies.

Anti Dumping Duty is levied by imposing a customs duty that is higher than normal custom duty but lower than export or general customs duty that is charged on an imported product.

The objective of Anti-dumping Safeguard duty

The objective of anti-dumping duty in India is to ensure fair trade conditions and protect the domestic industry from sudden surges of imports, which are below fair market value or sold at prices lower than the actual cost of production.

India has been a member of the World Trade Organization (WTO) since 1 January 1995. As a part of its obligations under the WTO, India has imposed anti-dumping duties on imports from countries that have also provided India with similar concessions in their national legislation, are engaged in dumping, and cause material injury to domestic industries. India has also signed and ratified the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (Anti-Dumping Agreement).

India imposes an Anti-dumping Safeguard duty if the price of the product is below the fair market price or sold at prices lower than its normal value. The Anti-Dumping Duty (ADD) Act, by virtue of which ADD is imposed in India, was enacted in 1983. It is based on the model legislation of that time – the United States Tariff Act, 1922 (USTA).

Also Read:- The Role of Anti-dumping Consultants

The ADD Act empowers the authorities to impose ADD on imported products that are dumped or subsidized by the exporting countries by way of charging a special additional duty at a prescribed percentage. The ADD Act also allows imposition of Anti-dumping Safeguard duty cum Countervailing Duty (AD/CVD) or only Countervailing Duty (CVD) depending on facts and circumstances.

Recent Use

Recently Anti-dumping duty has been imposed on imports of modems from China to India. The Anti-dumping Safeguard duty has been imposed by the Directorate General of Anti-Dumping and Allied Duties based on the petition filed by Qualcomm Incorporated and Qualcomm Technologies, Inc.

With the current news about the Anti-dumping Safeguard duty, many customers are calling us regarding it and asking what the implications are for them when they purchase modems from China. Some even say that they would rather not buy a modem at all or purchase an alternative product because they feel that they will have to pay more.

Since we are not liable to pay any duties, we thought of explaining why a company may be subject to what is termed as "Anti-Dumping Duty".