What’s the issue?
The ongoing trade war—sparked by U.S. President Donald Trump’s tariffs and retaliatory measures from China—has raised concerns in India about a possible influx of redirected exports. With major economies struggling to sell goods to the U.S., countries like China, Vietnam, and Indonesia might turn to India’s vast consumer market to offload their surplus products.
The Ministry of Commerce and Industry is especially alert to potential surges in imports of agricultural products from the U.S. and manufactured goods—like electronics, textiles, and steel—from countries facing trade restrictions.
Why is dumping a concern?
When countries produce more than they can consume or export traditionally, they often look for alternative markets. If goods are sold at prices lower than their fair market value, this is known as dumping, which can undercut local industries.
For example, Bangladesh’s garment industry and Indonesia’s electronics sector—both vital to their economies—may try to find new markets, such as India, to sell their products amid restricted access to the U.S.
Similarly, China, known as a global manufacturing hub, may also redirect its exports. The WTO noted that China’s export dominance is partly fueled by subsidies to state-owned enterprises, causing overcapacity in global markets.
What’s happening with U.S. farm produce?
There’s another twist—U.S. agriculture may also shift its focus to India. China, once a major buyer of American soybeans and corn, cut imports due to rising competition from South America and retaliatory tariffs. In 2024, U.S. agricultural exports to China dropped 15% to $24.7 billion. Now, India could emerge as an alternative destination for these goods.
Which Indian sectors are most vulnerable?
Several key industries in India could be affected by this influx. According to Ajay Srivastava, founder of the Global Trade Research Initiative (GTRI), the sectors at highest risk include:
- Chemicals
- Steel and Aluminium
- Textiles
- Plastics and Rubber
- Electronics
- Consumer Goods
The Directorate General of Trade Remedies (DGTR) is already investigating many of these sectors for possible dumping.
A prime example is the steel industry, where prices have fallen due to dumping. Preliminary findings show that U.S. and EU tariffs (since 2018) have led to trade diversion. Countries like Japan, South Korea, and China—who produce more steel than they consume—have been rerouting excess supply to India.
To manage the surge, DGTR recommended a 12% provisional safeguard duty on certain steel imports for 200 days. In the chemicals sector, China was found dumping titanium oxide (used in paints and cosmetics), harming local producers.
What about small and medium industries?
Smaller sectors—like MSMEs and textiles—are particularly at risk. Mohit Singla, founder-chairman of the Trade Promotion Council of India (TPCI), says small players lack the organization or resources to fight dumping. Unless the government steps in proactively, these industries could suffer the most.
By contrast, larger industries with fewer players often collaborate more effectively to push for trade remedies like safeguard duties.
Are current safeguards enough?
Experts like Srivastava believe that although the threat is real, India has tools to manage it. The country regularly imposes anti-dumping duties on imports from countries like China, South Korea, and EU members.
However, these duties typically apply to a small portion of overall imports, meaning the broader economic impact is often contained.
Can Indian firms fight back through competitiveness?
Unfortunately, not really. Mithileshwar Thakur, Secretary General of the Apparel Export Promotion Council (AEPC), says it’s nearly impossible to counter dumping purely through better pricing or quality. The cost margins are just too vast.
“You might increase competitiveness by 10–15%, but never by 100%,” he says. That’s why trade remedial measures—like anti-dumping duties, countervailing measures, or safeguard duties—are critical.
AEPC has already flagged its concerns to the Ministry of Commerce and Industry, seeking protection against potential dumping in textiles.
Singla adds that while anti-dumping actions can be lengthy and complex, safeguard duties offer a quicker response. These can be applied if a significant import surge is detected over a six-month period.
Final thoughts
While India might face an increase in dumped imports due to global trade tensions, existing safeguards and government vigilance offer some reassurance. The key will be in acting quickly—especially to protect vulnerable sectors and smaller businesses—from being overwhelmed by a wave of cheap, redirected exports.
More Current Affairs: https://learnproacademy.in/updates/