DGTR recommends withdrawal of anti-dumping duty on viscose

DGTR recommends withdrawal of anti-dumping duty on viscose

Part of: GS Prelims and GS- III – Economy

In news

• The Directorate General of Trade Remedies (DGTR) has suggested the withdrawal of the anti-dumping levy on viscose staple fibre originating in or exported from Indonesia or China and imported by India.

 What is Dumping?

Dumping is a process wherein a company (Ex: Chinese Firm X) exports a product (for Ex: to India) at a price that is significantly lower than the price it normally charges in its home (China) market.

 What is Anti-Dumping Duty?

• An anti-dumping duty is a protectionist tariff that a domestic government imposes on foreign imports that it believes are dumped.
• This is done with the rationale that these products have the potential to undercut local businesses and the local economy.
• According to global trade norms, including WTO, a country is allowed to impose anti-dumping duty to provide a level-playing field to domestic manufacturers.
• The duty is imposed only after a thorough investigation by a quasi-judicial body, such as DGTR (Ministry of Commerce & industry) in India.
• While the intention of anti-dumping duties is to save domestic jobs, these tariffs can also lead to higher prices for domestic consumers.
• In the long-term, anti-dumping duties can reduce the international competition of domestic companies producing similar goods.

 Different from Countervailing Duty (CVD):

• Countervailing Duties (CVDs) are tariffs levied on imported goods to offset subsidies made to producers of these goods in the exporting country (Ex: China).
• CVDs are meant to level the playing field between domestic producers of a product and foreign producers of the same product who can afford to sell it at a lower price because of the subsidy they receive from their government

News Source: TH