Journal of World Trade 40(6): 1081±1097, 2006.

# 2006 Kluwer Law International. Printed in The Netherlands.

Anti-dumping in IndiaÐPresent State and

Future Prospects

Prakash NARAYANAN*

Since imposing its first anti-dumping duty in 1992, India has rapidly grown to
become the most prolific user of this trade measure over the past few years. There is a clear
correlation between the number of anti-dumping investigations initiated by India and the
lifting of quantitative restrictions on importable goods and reduction of customs tariffs.
Also, most initiations involve petitioners who dominate the market under consideration to
a large extent, and the rate of success of anti-dumping initiations is high. These factors
indicate that anti-dumping measures are used as a tool for protection from competition
arising from greater liberalization. As the trend of significant use of anti-dumping measures
seems likely to continue in the near future, it is imperative that some changes be brought
at least to the manner in which the Indian anti-dumping authority functions.
Maybe it [anti-dumping legislation] is getting into the hands now of men who do have ideas, and
these ideas may be protectionist. If such is the case, what they can do with that law will make the
escape clause look like small potatoes, they can, if they wish, raise the effective tariff barriers
more than all the negotiations in Geneva will be able to achieve in the other direction.1

I. INTRODUCTION

Even Jacob Viner, the author of the classical work on dumping,2 was sceptical about
the purposes the US Anti-dumping Act of 19213 was serving. The number of anti-
dumping measures taken since the Agreement on Implementation of Article VI GATT
(the Anti-Dumping Agreement) came into effect in 1995 (1,656 till 31 December 2004)4
and the number of initiations of anti-dumping investigations since 1995 (2,646 till 31
December 2004)5 gives credence to Viner's scepticism. The rise in the use of anti-
dumping measures has hardly gone unnoticed.6 The shift in the demographics of usage of

* Associate, Blake, Cassels & Graydon LLP, Toronto, Canada; of the Bar of Ontario, Canada, and
Maharashtra, India. The views expressed in this article are solely those of the author and do not reflect those of the
firm. The author can be contacted at <prakash1004@yahoo.com>. This paper was finalized in December 2005 and
the data herein is accurate as of that date.
1 Statement by Jacob Viner, Hearings before the Subcommittee on Foreign Economic Policy, 84th Cong. 1st Sess.
(Washington, D.C.: US Government Printing Office, 1955), p. 607. Geneva was host to a multilateral trade
negotiation round.
2 Jacob Viner, DumpingÐA Problem in International Trade (New York: A.M. Kelley, 1966).
3 42 Stat. ll, Secs. 201(a), 202(a).
4 WTO Anti-dumping Statistics, available at <www.wto.org/english/tratop_e/adp_e/adp_e.htm>.
5 Id.
6 Apart from numerous articles, some of the books have been authored on this subject are Michael J. Finger
(ed.), Anti-dumping: How It Works and Who Gets Hurt (Ann Arbor, MI: University of Michigan Press, 1993); Rainer
M. Bierwagen, ``GATT Article VI and the Protectionist Bias in Anti-Dumping Laws'', in Norbert Horn, Clive M.
Schmitthoff and Richard M. Buxbaum (eds), Studies in International Economic Law (Boston: Kluwer Law and
1082 JOURNAL OF WORLD TRADE

anti-dumping measures since 1995 has also been noted.7 Prior to 1995, anti-dumping
measures were initiated almost exclusively by the developed nations of the United States,
Canada, and the EU. However, after the entering into force of the World Trade
Organization (WTO) in 1995, the number of anti-dumping investigations commenced
and measures adopted by developing countries started to rise. From 1 January 1995 to 30
June 2002, developing countries initiated 1,144 anti-dumping investigations while
developed economies initiated 819 and transition economies (including China) 16.8
Indeed among all WTO Members, a developing country, India, has initiated the
largest number of anti-dumping investigations (400) in the period 1 January 1995 to 30
June 2004, and also imposed the largest number of anti-dumping measures (302) in the
same period.9 Table 1 demonstrates that India has a high incidence (defined as the
number of anti-dumping investigations per US$ billion of imports) of anti-dumping
initiations. While being significantly higher than the incidence of anti-dumping
initiations in developed countries, it is also significantly higher than the incidence of
anti-dumping investigations by other developing countries. Only Argentina comes
close to having such high rates of incidence, perhaps a reflection of the recent economic
turmoil it has been through. India has not had any similar economic crises since 1991,
and in fact has been experiencing GDP growth at about 5±6 percent for the past few
years. Table 1 is indicative of India's disproportionate use of anti-dumping in relation to
its participation in world trade.

TABLE 1: INCIDENCE OF ANTI-DUMPING INVESTIGATIONS AMONG SELECT USERS (1995±2003)

Country 1995 1996 1997 1998 1999 2000 2001 2002 2003

Argentina 1.34 0.93 0.46 0.25 0.90 1.79 1.28 1.55 0.07
Brazil 0.09 0.31 0.17 0.30 0.31 0.19 0.29 0.16 0.08
China NA NA NA NA 0.00 0.03 0.06 0.10 0.05
European Community 0.05 0.04 0.06 0.03 0.07 0.03 0.03 0.02 0.01
Mexico 0.05 0.04 0.06 0.09 0.08 0.04 0.03 0.06 0.08
South Africa 0.52 1.09 0.70 1.40 0.60 0.70 0.21 1.37 0.20
Turkey 0.00 0.00 0.08 0.02 0.20 0.13 0.37 0.36 0.16
United States 0.02 0.03 0.02 0.04 0.04 0.04 0.07 0.03 0.03
India 0.17 0.55 0.31 0.64 1.46 0.80 1.60 1.41 0.65

Note: Data based on WTO anti-dumping statistics and WTO international trade statistics.

cont.
Taxation Publishers, 1990); Richard Boltuck and Robert E. Litan (eds), Down in the Dumps: Administration of the
Unfair Trade Laws (Washington, D.C.: Brookings Institution, 1991); P.K.M. Tharakan (ed.), Policy Implications of
Anti-dumping Measures (Amsterdam: Elsevier Science, 1991); Brian Hindley and Patrick Messerlin, Anti-dumping
Industrial Policy (Washington, D.C.: American Enterprise Institute, 1996); Michael Hart (ed.), Finding Middle
Ground: Reforming the Anti-dumping Laws (Ottawa: Centre for Trade Policy and Law, 1997); Robert Z. Lawrence
(ed.), Brookings Trade Forum (Washington, D.C.: Brookings Institution Press, 1998); Richard Dale, Anti-dumping
Law in a Liberal Trade Order (London: Macmillan, 1980).
7 See, e.g., Michael J. Finger and Andrei Zlate, WTO Rules that Allow New Trade Restrictions: The Public Interest
is a Bastard Child (UN Millennium Project Task Force on Trade, April 2003).
8 Id.
9 WTO Anti-dumping Statistics, as note 4 above.
 ANTI-DUMPING IN INDIA 1083

This article examines the use of anti-dumping measures by the most prolific user of anti-
dumping measures, India; it attempts to determine the reasons for such a surge in the use
of anti-dumping measures and predict if this trend is likely to continue. Section II begins
with a brief description of the history of India's trade policyÐa topic that is crucial in
order to understand this increased use of anti-dumping measures. Section III examines
the correlation between the reduction of barriers to trade with India such as customs
tariffs and quantitative restrictions, and the imposition of anti-dumping measures.
Section IV discusses some features of the use of anti-dumping measures by India such as
sectoral usage and market structure of petitioners, providing indications as to the main
beneficiaries of anti-dumping measures. Section V predicts the use of anti-dumping
measures by India in the near future, while Section VI provides suggestions to make
India's use of anti-dumping measures more transparent and balanced, while ultimately
moving towards eliminating reliance on it, and section VII sums up the article.

II. INDIA'S TRADE POLICY

India initiated its first anti-dumping investigation only in 1992, and hardly invoked
anti-dumping measures until 1996±1997, with the number of measures imposed being
in single digits as the last column in Table 2 demonstrates. The explanation for the
surge in anti-dumping initiations after 1996 is based on India's trade policy. India's
external trade policy can be broadly categorized into two major periodsÐpre-1991 and
post-1991.

A. TRADE POLICY PRE-1991

Subsequent to independence in 1947, India largely followed a socialist model of

development, focusing on import substitution and largely closing off its borders to
foreign trade. This was despite the fact that India was one of the founding members of
the GATT. Indeed, while world exports grew at an average of 8 percent per year in the
period 1951±1973 (prior to the first ``oil shock''), India's exports grew only at an
average of 2.66 percent per year, and its ratio of export to GDP declined from 7 percent
in 1951±1952 to 4 percent in the early 1970s.10
By 1991, India's current account deficit reached a record 3.2 percent of GDP, and
debt-service payments comprised 35 percent of foreign exchange receipts. Short-term
debts amounted to about 146 percent of foreign exchange reserves. Also, foreign
exchange reserves dropped to a level as low as to be able to pay for only two months'
worth of imports. The rate of inflation was above a politically unacceptable 10 percent.
Expectations of a devaluation of the Indian Rupee led to withdrawal of deposits by
non-resident Indians. The Gulf conflict resulted in oil prices shooting up, oil being a

10 T.N. Srinivasan and Suresh D. Tendulkar, Reintegrating India with the World Economy (Washington, D.C.:
Institute of International Economics 2003), p. 23.
1084 JOURNAL OF WORLD TRADE

large component of India's imports and oil imports a large portion of the government's
trade bill as it alone was authorized to import oil, which it in turn subsidized and sold to
consumers in the domestic market. Foreign exchange remittances from the sizeable
non-resident population in the Gulf also dried up.
Combined with these financial woes, the collapse of the Soviet Union and thus the
world's most important centrally planned economy and a key military and economic
ally of India, in addition to the rapid development of China after it commenced
implementing its economic reform policies in the later 1970s, weakened political
support and thinking for the socialist model.
In the context of its severe balance-of-payments crisis, India was forced to
approach the International Monetary Fund (IMF) for a massive bail-out, shipping part
of its gold reserves to pledge as collateral. As part of the conditionalities for the loan, the
IMF required India to carry out major structural reforms and move from a socialist
model to a more market-based economy. The conditions essentially required the State
to intervene less in industry and to commence privatization of the numerous businesses
it was involved in, as well as to commence opening its borders to increased foreign
trade.

B. EXTERNAL TRADE POLICY POST-1991

Nineteen Ninety-One thus marked the first phase of economic reforms. The
exchange rate was transformed from a discretionary basket-pegged system to a market-
based system. The earlier policy of requiring licences for importation or domestic
production of almost any good (the ``licence raj'') was dismantled. On the customs tariff
side, the importÐweighted average tariff for all imports was as high as 87 percentÐfor
consumer goods as high as 153 percent, and for manufactured goods 92 percent.11 Peak
tariff rates were as high as 300 percent. Progressively over the years, the tariff rates have
been reduced as can be seen from Table 2. Peak rates stand at a significantly lower 20
percent.12 The reduction of tariff and of the number of different tariff rates continues,
and recent budget announcements have indicated an intention to lower peak rates to
``ASEAN levels'', i.e. around 5 percent.13
In addition, the number of goods that could be imported only by the government
(canalization) was reduced in 1991. Subsequent to the completion of the Uruguay
Round negotiations in 1994, WTO Members were required to remove quantitative
restrictions (QRs). India continued to maintain QRs on the basis of balance-of-
payment difficulties. By 1996±1997, it had reached agreements with some developed
countries (e.g., EU, Canada and Australia) to progressively eliminate its QRs by 2003.
However, the United States considered this too slow and filed a complaint with the

11 World Bank Annual Report, 1997 (Washington, D.C.: World Bank), Table 10.
12 Government of India 2005±06 Union Budget, at <http://indiabudget.nic.in/ub2005-06/ubmain.htm>
(visited 14 July 2005).
13 Id.
 ANTI-DUMPING IN INDIA 1085

TABLE 2: QUANTITATIVE RESTRICTIONS, TARIFFS AND ANTI-DUMPING MEASURES IN INDIA (1990±2003)

Year Number of QRs Peak tariff rate Average tariff Weighted Number of
lifted (%) rate (%) average tariff AD
rate (%) measures
initiated

1990±91 ± 350 128 87.0 0

1991±92 ± 150 NA 72.5 3
1992±93 ± 110 94 60.6 5
1993±94 ± 85 71 46.8 1
1994±95 ± 65 55 38.2 9
1995±96 ± 50 40.8 25.9 5
1996±97 ± 52 38.6 24.6 20
1997±98 488 45 34.4 25.4 11
1998±99 391 45 40.2 29.2 38
1999±2000 894 40 39.6 31.4 26
2000±01 714 38.5 39.1 35.7 37
2001±02 715 35.8 31.4 38.5 76
2002±03 69 30.8 29.0 29.0 67

Notes: (1) Data for Peak tariff rates and weighted average import rates obtained from Montek S.
Ahluwalia, Economic Reform in India Since 1991: Has Gradualism Worked?, 16 Journal of Economic
Perspectives 3 (2002), p. 74. (2) Data for average tariff rates obtained from T.N. Srinivasan,
``Integrating India With the World Economy: Progress, Problems and Prospects'', in Anne E. Krueger
and Sajjid Z. Chinoy (eds.), Reforming India's External, Financial and Fiscal Policies (Stanford: Stanford
United Press, 2003), p. 21. (3) Data for 2000±01 and 2001±02 are obtained from World Bank India
Budget (01±02) Analysis. Data for 2002±03 are only to the first half of 2003. (4) Data on QRs are
obtained from Government of India Economic Survey 2001±02. While the announcement of lifting
of QRs was done on the last day of the fiscal year (31 March), it came into effect only in the following
fiscal year. Thus, the announcement of lifting of QRs on 488 items on 31 March 1997 is shown in the
year 1997±98 rather than as the Economic Survey does, in 1996±97. (5) Data for anti-dumping
initiations are obtained from GATT and WTO semi-annual reports of the Anti-dumping Committee.
The data are different in this table than in Table 1 as the data here represent initiations between 1 July
of one year to 30 June of the next year, whereas data in Table 1 follow the calendar year.

WTO claiming that India did not suffer from a balance-of-payments crisis any longer.
Pursuant to a WTO decision in 1999,14 India's argument of balance-of-payment
exceptions to delay removal of quantitative restrictions could no longer hold, and based
on a time line agreed to with the United States, by 2001 almost all quantitative
restrictions were abolished. A very few number of QRs that are permitted under
GATT Articles XX and XXI still remain based on health, safety and moral
considerations.

14 WTO Panel Report, IndiaÐQuantitative Restrictions on Imports of Agricultural, Textile and Industrial Products,
WT/DS90/R, adopted 6 April 1999; WTO Appellate Body Report, IndiaÐQuantitative Restrictions on Imports of
Agricultural, Textile and Industrial Products, WT/DS90/AB/R, adopted 23 August 1999. India argued that it could
maintain certain quantitative restrictions on the basis of GATT Article XVIII:B. The WTO Panel and Appellate
Body concluded that India's balance-of-payment position was sufficiently strong so as not to fulfil the requirements
of GATT Article XVIII:B.
1086 JOURNAL OF WORLD TRADE

The following section examines whether there is a correlation between India's

trade liberalization policy and the number of anti-dumping investigations initiated.

III. TARIFFS, QRS AND ANTI-DUMPING MEASURES

The data in Table 2 relating to average tariffs and weighted average tariffs, help
determine whether there is a correlation between tariff reduction and anti-dumping
initiations. The table suggests that an increase in the number of anti-dumping
initiations is related to a combination of lifting of quantitative restrictions and reduction
of import duties. The significant reductions in import tariffs (both weighted and
average) from 1990 to 1996 resulted only in single digit initiations. In the same period,
all of the quantitative restrictions that had been in place for decades continued. On the
other hand, once QRs started to be dismantled from 1996, the number of initiations
increased dramatically. Particularly so when India was forced to dismantle the last batch
of 1,429 QRs consequent to a WTO Dispute Settlement Body ruling.15 As a result of
this ruling, the initial time period of six years (1997±2003) that India had agreed with
other developed countries within which to eliminate its QRs, was reduced effectively
to two years (1999±2001). The table demonstrates that in the years that the QRs were
being lifted (1997±2002), the weighted average tariff actually increased. The simple
average tariff over the same period increased and then slowly decreased to end the
period at a figure not very different from where it started. Throughout this period of
lifting of QRs, the number of initiations rose rapidly. In the last period (2002±2003),
while the process of lifting of QRs was completed, the weighted average tariff dropped
fairly significantly (by almost 10 percentage points). The number of initiations, perhaps
as a reflection of this significant drop, remained high. Thus, high AD initiations seem to
have commenced as a result of lifting of QRs. The continuation of high initiations
could be because the domestic industry has now realized the potential of this
instrument and continues to use it; and the drop in weighted average tariff has affected
the domestic industry.
Another significant change from the first half of the previous decade is in the
attitude of domestic industries and the Indian government towards anti-dumping. First,
a separate Directorate-General of Anti-dumping and Allied Duties (DGAD) division
was created within the Department of Commerce in 1998 that had more staff and
dedicated resources to tackle anti-dumping complaints. Second, in 1999, the Customs
Tariff Act, 1975 was amended to incorporate the Anti-dumping Agreement
requirements into domestic legislation.16 Finally, the government took steps to alert
the domestic industry of the existence of anti-dumping measures. The 1,429 QRs that
were the last to be lifted were also those thought by the government to need the longest

15 Appellate Body Report, IndiaÐQuantitative Restrictions, ibid.

16 The Indian anti-dumping legislation comprises mainly of sections 9A, 9B and 9C of the Customs Tariff
Act, 1975 and the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped
Articles and for Determination of Injury) Rules, 1995.
 ANTI-DUMPING IN INDIA 1087

protection. On being forced to abandon this protection significantly earlier than it had
planned, the government responded to domestic industry fears of flooding of Indian
markets by cheap imports by frequently publicly mentioning the availability of trade
measures such as safeguard and anti-dumping duties.17
If removal of QRs were the major reason for the surge in the number of anti-
dumping initiations by India, one would expect the industries producing products
previously protected by QRs, but from which QRs were lifted, to be the ones most
active. The following section analyses whether this is indeed the case and further
examines trends in the use of anti-dumping by India.

IV. TRENDS IN USE

The DGAD has, since 2001, commenced producing Annual Reports that carry
details of the anti-dumping law in India, cases investigated, decisions on anti-dumping
matters by courts, etc. These annual reports form an important comprehensive source
of data that was previously unavailable.

A. SECTORAL USE

To determine the relation between lifting of QRs and anti-dumping initiations, it

would be useful to examine the sectoral break-up of initiations and compare the results
with the products on which QRs were lifted recently. A product-wise break-up of
anti-dumping cases is presented in Table 3. The data that are available for all cases
initiated up to 2001 (1992±2001), 2002 (1992±2002), and 2003 (1992±2003)
demonstrate that the chemical (including petrochemicals) and pharmaceutical
industries were the largest initiators of anti-dumping duties to 2001 and continue to
hold that position. Indeed the increase in number of initiations by the chemicals sector
is the largest during 2001±2002. One would therefore expect the items that were
removed from the QRs to fall largely in the chemicals and pharmaceutical sectors.
While QRs commenced to be lifted from 1997, as of 31 March 1996, out of the
total of 10,202 tariff lines, 6,161 were already freely importable. The lifting of QRs till
the last two batches of 714 and 715 items was mainly in textile, agricultural and marine
products and consumer goods. All capital goods, assemblies, etc. were already freely
importable.18 Similarly, most raw materials such as chemicals and petrochemicals were
also freely importable. As for the last set of 1,429 items on which quantitative measures
were lifted, from among the list of 714 items on which QRs were lifted in 2000,
predominant are animal and vegetable products, textiles and numerous consumer
items. However, QRs were also lifted on some specific listed chemical products and

17 For instance see Commerce Ministry, India Dismantles QRs, WTO Newsletter, at <http://commin.nic.in/
doc/wtoapr01.htm> (visited 14 December 2004).
18 Report of the Executive Committee, WTO, India Trade Policy Review 1998.
1088 JOURNAL OF WORLD TRADE

TABLE 3: SECTORAL (PRODUCT-WISE) BREAK-UP OF ANTI-DUMPING INITIATIONS IN INDIA (1992±2003)

Number of cases
Product category 1992±2001 1992±2002 1992±2003

Chemicals and petrochemicals 56 70 78

Pharmaceuticals 25 28 30
Fibres/yarns 13 14 15
Steel and other metals 10 14 14
Consumer goods 8 13 13
Others 9 14 17
Total 121 153 167

Notes: (1) Data obtained from DGAD Annual Reports 2002±03; and 2003±04. Data reflect figures up
to March 2004. (2) Chemical and petrochemicals, and pharmaceuticals are categorized under the
Harmonized System together as ``products of chemicals and allied industries'' under Section VI. See
WTO Harmonized System Section Headings on WTO AD Statistics. (3) The total number of cases
differs between this table and Table 2 because the DGAD counts an anti-dumping initiation on one
product irrespective of the number of countries from which that product is being imported, as one
case. However, the WTO counts the importation of a single product from a single country as one
initiation, and thus the importation of the same product from a number of countries as many cases as
countries under investigation.

perhaps more importantly, on the tariff heading ``other chemical products and
preparations of the chemical and allied industries''.19 This category could have had an
impact on the imports of chemical products and thus the number of anti-dumping
initiations. The second batch of lifting of QRs (in 2001) on 715 items included
fertilizers, food grains, paper products, automobiles, tobacco, and crude petroleum
products. Even the crude petroleum products were items such as petrol, diesel and jet
fuel, which would not have a direct effect on the chemical and petrochemicals sectors
but on the contrary could help lower costs.
In 2001, the government created a ``war room'' of a standing committee
comprised of government secretaries from different departments to track, collate and
analyse data on 300 of the items on which QRs were lifted to determine if imports rose
dramatically in any of them and if so the measures to be taken.20 Most of these
``sensitive'' items were agricultural products, and chemicals did not even figure in them.
Table 4 shows the growth in imports of chemicals (including petrochemicals and
pharmaceuticals) as a percentage share of total imports as compared to the reduction in
tariff rates. This table demonstrates that imports of chemicals more or less kept pace
with changes in overall imports, indeed actually dropping in one year when tariffs were
lowered, and remaining roughly the same percentage share of total imports over the
entire period.

19 A complete list of 714 items on which QRs were lifted in 2000 is available in Government of India, 3(4)
India and the WTO (2001), at <http://commerce.nic.in/wtoapr01.htm#h2> (visited 12 December 2004).
20 As note 17 above.
 ANTI-DUMPING IN INDIA 1089

TABLE 4: TARIFFS AND IMPORTATION OF ORGANIC AND INORGANIC CHEMICALS INTO INDIA (1995±2003)

Year Customs tariff Total imports Import share of Increase in Increase in

rate (US$ billion) chemicals (%) total imports imports of
(%) chemicals (%)

1999±00 35 55.4 7.9 16.6 5.3

2000±01 30 57.9 6.7 4.5 ±14.7
2001±02 30 56.3 5.4 ±2.7 13.3
2002±03 30 64.5 6.9 14.5 8.7
2003±04 25 80.1 7.4 24.1 34.9

Notes: (1) Compiled from Government of India Economic Surveys 2001±02, 2002±03, 2003±04, and
2004±05 data. (2) Tariff rates exclude an additional duty and special additional duty that were levied in
some years.

In the context that neither QRs nor reduction of tariff duties make an obvious case
for the chemicals sector to initiate a large number of anti-dumping investigations, it is
noteworthy that the chemicals sectors is amongst the most popular sectors for
commencement of anti-dumping investigations worldwide,21 and India is no exception
to this rule.
The chemical industry (including petrochemicals and pharmaceuticals) industry in
India is among the fastest growing sectors in India. India has the 13th largest chemicals
industry in the world and the third largest in Asia. The sector constitutes about 14
percent of overall industrial production. Exports from this sector account for about 14
percent of manufacturing exports and 10 percent of overall exports. The chemical
industry has seen a growth rate averaging 15 percent since 1999 making it among the
fastest growing sectors in the economy.22 This impressive growth rate is said to be
reducing import dependency in this sector.23 This combined with other factors discussed
below perhaps better explains the reason for the chemical industry being a prolific user of
anti-dumping and for India having such a high number of anti-dumping initiations.

B. MARKET STRUCTURE AND SUCCESS RATE

At least one study demonstrates that the market structure of Indian industries that
initiated anti-dumping investigations is highly concentrated.24 In almost 90 percent of
the cases initiated, the number of petitioners was between 1 and 3.25 In almost

21 In the second half of 2001, of the 186 investigations initiated worldwide, 60 were in the base metals sector
and 41 in chemicals. In the same period in 2002, of the 149 measures initiated, 46 were in base metals and 43 in
chemicals. The pattern had been the same in the first half of 2002. During the first half of 2003, of the 79 measures
initiated, the largest number (26) were in chemicals, followed by 15 in base metals (data obtained from WTO Anti-
dumping Statistics, as note 4 above).
22 Government of India, Department of Chemicals and Petrochemicals, Annual Report 2001±02.
23 Id.
24 Aradhna Aggarwal, Anti-dumping Law and Practice: An Indian Perspective, Research Study (Indian Council for
Research on International Economic Relations, 2002).
25 Article 5.4 of the Anti-dumping Agreement requires that a petition be supported by petitioners producing
at least 25 percent of the total domestic production of the product alleged to be dumped.
1090 JOURNAL OF WORLD TRADE

50 percent of anti-dumping investigation initiations, the petitioners were almost

monopolies with average market share of 97.4 percent. In a majority of initiations
petitioners have a greater than 80 percent market share of the domestic market.26 These
data clearly suggest that filing of anti-dumping claims is a strategy used most frequently
by dominant market players. This observation supports the claim of some theorists that
anti-dumping is merely a mechanism of domestic industry protectionism particularly
where there exists a strong and vocal group that has the resources to lobby for such
protection.27 However, the chief beneficiaries of ``dumped'' goods, or goods imported
at a lower price than at which it is sold by domestic producers, namely ultimate
consumers especially in the form of the general public, are usually poorly organized and
have little input into the anti-dumping investigation process. Indeed, the lack of
consumer input has been an important criticism of the US anti-dumping mechanism.28
Some other countries, such as Canada and the EC, are required by their domestic anti-
dumping legislations to take consumers' interests in the form of ``public interest'' into
account.29 The Indian anti-dumping legislation does not require the DGAD to take
public interest into account. While there are instances of the DGAD considering the
impact of any duties on the Indian industry at least in its preliminary findings, it does
not appear as if any decision to recommend imposition of anti-dumping duties has been
reversed or the amount of duties imposed reduced, on account of public interest.30
Another feature of the use of anti-dumping measures in India is that anti-dumping
petitioners enjoy a very high ``success rate'', i.e., ratio of the number of measures
imposed to number of investigation initiations. From the more than 344 anti-dumping
investigations initiated from 1992 to 2002, the DGAD has found a case for imposition
of anti-dumping duties in all but 12 cases.31 This rate of success is substantially higher
than that in other countries.32 Given that the threat of anti-dumping investigation is

26 Aggarwal, as note 24 above.

27 For instance, see Bierwagen, as note 6 above.
28 Michael J. Trebilcock and Robert Howse, The Regulation of International Trade (London: Routledge 1995),
p. 167.
29 See Jean-Marc Leclerc, Reforming Anti-dumping Law: Balancing the Interests of Consumers and Domestic
Industries, 44 McGill L.J. (1999), p. 111. The author argues that the ``public interest'' examination in Canada has
failed to have any real effect on anti-dumping decisions.
30 See for instance, DGAD, Newsprint from US, Canada and Russia, No. 21/ADD/96 (1997)(Prelim.); DGAD,
P Tert Butyl Catechol from France, 19/1/97/ADD (1998)(Prelim.); DGAD, Polyester Staple Fibre from Indonesia,
Thailand, Taiwan and Korea, 29/1/98-DGAD (1999)(Prelim); DGAD, Trimethoprim from China, 35/1/2001-DGAD
(2001)(Prelim.).
31 Author's calculations based on data from DGAD Annual Report 2002-03 and DGAD anti-dumping
findings available at <http://commerce.nic.in> (visited 10 July 2005).
32 For instance, in the United States, which, unlike India, follows a ``bifurcated'' process of one
administrative body determining whether dumping has occurred and another determining whether the domestic
industry has suffered injury, the success rate of a finding of dumping is around 90 percent while the success rate of a
finding of injury is only about 50 percent. Thus the likelihood of having anti-dumping duties imposed is 50 percent
of 90 percent of the initiations. See John A. Ragosta and John R. Magnus, ``Anti-dumping and Antitrust Reform
in the NAFTA: Beyond Rhetoric and Mischief'', in Michael Hart (ed.), Finding Middle Ground: Reforming the
Anti-dumping Laws in North America (Ottawa: Centre for Trade Policy and Law, 1997); US International Trade
Commission, The Economic Effects of Anti-dumping and Countervailing Duty Orders and Suspension Agreements, USITC
Pub. 2900 (1995), p. 3±1 (39.4 percent success rate for anti-dumping cases over the period 1980±93).
 ANTI-DUMPING IN INDIA 1091

itself seen as an effective tool that reduces imports,33 the knowledge that the DGAD
would almost certainly recommend imposition of anti-dumping duties could only
aggravate this effect.
Some other aspects of the operation of the DGAD while being a testimony to its
ingenuity also reflect the protective purposes for which anti-dumping measures are
being used. First, the DGAD appears to be the only anti-dumping investigating agency
in the world to have initiated anti-dumping investigations suo moto.34 In November
2000, the DGAD initiated suo moto actions against import of shoes, toys and batteries
from China. In the case of batteries and shoes, the DGAD found dumping and injury to
the domestic industry and imposed anti-dumping duties, while in the case of toys, the
DGAD found that injury to domestic industry could not be established and thus closed
its investigation.35 Second, the DGAD is the only anti-dumping authority to have used
the ``material retardation to the establishment of domestic industry'' standard of injury
to impose anti-dumping duties. GATT Article VI requires a positive finding of
``dumping'' of the product as well as a positive finding of the dumping causing material
injury to the domestic industry producing like products before anti-dumping duties can
be imposed. This material injury can be of three typesÐmaterial injury to an
established domestic industry; threat of material injury to an established domestic
industry; and material retardation to the establishment of domestic industry.36 The
difference between the three lies in timing. In the first, an industry producing ``like''
products already exists and is currently (during the time of the investigation) being
injured due to the dumped imports; in the second, a domestic industry producing like
products exists and is not currently being injured but fears injury in the future due to
the ongoing dumping of imports; in the third, the domestic industry has not been
``established'', i.e., it has either not commenced production or having commenced
production has not stabilized its operations, and the dumped imports are preventing the
industry from being established. The ``material injury'' standard is the most frequently

33 Robert Staiger and Frank Wolak, Measuring Industry Specific Protection: Anti-dumping in the United States, at
<http://econwpa.wustl.edu/eps/it/papers/9410/9410004.pdf> (visited 6 December 2003).
34 Whether suo moto initiations of anti-dumping measures are permitted by the Anti-dumping Agreement is
uncertain. Article 5.1 of the Anti-dumping Agreement states: ``Except as provided for in paragraph 6, an
investigation to determine the existence, degree and effect of any alleged dumping shall be initiated upon a written
application by or on behalf of the domestic industry.'' Paragraph 6 reads: ``If, in special circumstances, the
authorities concerned decide to initiate an investigation without having received a written application by or on
behalf of a domestic industry for the initiation of such investigation, they shall proceed only if they have sufficient
evidence of dumping, injury and a causal link, as described in paragraph 2, to justify the initiation of an
investigation.'' While these two paragraphs read together appear to permit suo moto initiations, paragraph 4 states:
``The application shall be considered to have been made `by or on behalf of the domestic industry' if it is supported
by those domestic producers whose collective output constitutes more than 50 per cent of the total production of
the like product produced by that portion of the domestic industry expressing either support for or opposition to
the application.'' It also further clarifies that ``However, no investigation shall be initiated when domestic producers
expressly supporting the application account for less than 25 per cent of total production of the like product
produced by the domestic industry.'' Thus, it can be argued that the Anti-dumping Agreement under Article 5.6
does not permit suo moto initiations, rather at best, an initiation of investigation by domestic producers whose
collective output is less than 50 percent of the total domestic production of the product, though higher than 25
percent. There has been no GATT or WTO challenge based on suo moto anti-dumping investigations.
35 DGAD Annual Report, 2001±02, pp. 130±132.
36 GATT, Article VI.
1092 JOURNAL OF WORLD TRADE

used form of injury by the DGAD and by investigating authorities around the world.
While the threat of material injury standard is used to a lesser extent, the material
retardation standard has hardly ever been used. The United States has imposed anti-
dumping measures based on a finding of material retardation only thrice, and the EC
only once, all of these being prior to 1995.37 After the coming into force of the WTO,
however, India appears to be the only country to have imposed anti-dumping duties
based on material retardation.38 This is significant, as the Anti-dumping Agreement
does not elaborate upon the ``material retardation'' standard. This is in contrast to the
``material injury'' and ``threat of material injury'' standards for which the Anti-dumping
Agreement contains explanations of the factors to be examined39 to determine the
existence of injury. The fear is that countries could use the material retardation standard
to arrive at positive findings of injury to domestic industry in a more arbitrary manner
than possible under the other two standards. Indeed, the current decisions of the
DGAD based on material retardation may be WTO non-compliant as a previous
GATT panel ruling has held that material retardation cannot be found in conjunction
with material injury or threat of material injury; the two being mutually exclusive.40
This combination of seeming leniency of the DGAD, combined with the
concentrated market structure of the chemical and pharmaceutical sectors and the fact
that they are fast growing sectors and therefore more likely to be seen as needing
``support and encouragement'' in initiating anti-dumping investigations especially since
the sector is an initiator of a large number of anti-dumping investigations worldwide, is
perhaps a more likely reason for the large number of initiations by them.

V. FUTURE PROSPECTS

In section IV, it is suggested that though the rapid increase in initiation of anti-
dumping measures by India commenced as the result of lifting of QRs, once that
process was largely completed in 2001, the significant drop in tariffs provided the
momentum for the large number of initiations. This section considers the prospects for

37 USITC, Salmon Gill Fish Netting of Manmade Fibres from Japan, ITC Pub. 1234, Inv. No. 751-TA-5 (Mar.
1982)(Final); USITC, Certain Dried Salted Codfish from Canada, ITC Pub 1711, Inv. No. 731-TA-199 (Sept.
1985)(Final); USITC, Benzyl Paraben from Japan, ITC Pub 2355, Inv. No. 731-TA-462 (Feb. 1991)(Final). In
Certain Types of Electronic Microcircuits Known as DRAMs originating in Japan, O.J. L 193, 25/07/1990 pp. 1±10, the
Council of the European Communities found that the facts of the case supported a finding of either material
retardation or material injury, and left the question of the nature of injury open. For a detailed discussion of the use
of the material retardation standard see Dong Woo Seo, Material Retardation Standard in the US Anti-dumping Law, 24
Law & Policy in International Business 3 (1993), p. 864; Prakash Narayanan, Injury Investigations in ``Material
Retardation'' Anti-dumping Cases, 25 Journal of International Law & Business 1 (2004), p. 37.
38 DGAD, Fused Magnesia originating in, or exported from, the People's Republic of China, DGAD, D (-) Para
Hydroxy Phenyl Glycine Base (PHPG Base) from EC, DGAD, D (-) Para Hydroxy Phenyl Glycine Methyl Potassium
Dane Salt originating from China PR and Singapore.
39 See Anti-dumping Agreement, Article 3.
40 See GATT Panel Report, KoreaÐAnti-Dumping Duties on Imports of Polyacetal Resins from the United States,
1993 GATTPD LEXIS 10, adopted 27 April 1993. In all the three Indian cases, the DGAD found material
retardation in conjunction with material injury or threat of material injury.
 ANTI-DUMPING IN INDIA 1093

India's continued use of anti-dumping measures and the various factors that may
determine the extent of such use.

A. CONTINUED TARIFF REDUCTION

As of 2003, India's average tariffs, at 29 percent, were still among the highest in the
world.41 The Indian government continues to pursue its policy of reducing peak tariff
levels to that of its East Asian neighbours.42 This continued reduction of tariffs is bound to
force domestic industries to keenly examine anti-dumping duties as a protective measure
and increasingly turn towards it. This would be especially so if firms recognize that anti-
dumping investigations almost never result in a negative final finding, and have almost
always resulted in imposition of preliminary duties providing at least temporary respite.
In addition, as discussed below, significant changes in particular sectors of the
domestic industry as a result of WTO commitments that have recently taken effect
could also contribute to an increased use of anti-dumping measures.

B. PHARMACEUTICALS

The Indian pharmaceutical sector is ranked fourth in terms of volume and 13th in
terms of value in the world.43 The significant rise in the pharmaceutical sector can be
largely attributed to the policy undertaken in the 1970s to abolish product patents and
maintain only process patents thus permitting the domestic industries to reverse
engineer drugs patented abroad and produce them generically at a much lower cost in
India. This helped India become one of the largest and cheapest generic drug producers
in the world. India could therefore produce most drugs domestically except for some
specialized drugs that were imported. However, from 1 January 2005, as part of its
commitment under the Agreement on Trade Related Aspects of Intellectual Property
Rights (TRIPs), India commenced recognizing product patents. In the interim,
consequent to a WTO Appellate Body ruling,44 India had provided a ``mail-box''
facility under which products obtained Exclusive Marketing Rights in India. Over the
past few years, domestic pharmaceutical manufacturers have been realigning themselves
by performing contract research and manufacturing for multinational pharmaceutical
companies, and entering into marketing alliances with them. Indeed the pharmaceutical
sector has enjoyed significant growth rates of about 14 percent in the past few years,45
and many established domestic pharmaceutical manufacturers have commenced

41 Arvind Virmani, Customs Tariff Reform, 1(1 Rev) ICRIER Policy [Briefs] (2004).
42 Government of India Union Budget 2005±06. The budget announced the reduction of the peak tariff rate
on non-agricultural products to 15 percent.
43 Federation of Indian Chambers of Commerce & Industry, Competitiveness of the Indian Pharmaceutical
Industry in the New Product Patent Regime (March 2005).
44 WTO Appellate Body Report, IndiaÐPatent Protection for Pharmaceutical and Agricultural Chemical Products,
AB-1997-5, adopted 16 January 1998.
45 Government of India, Press Information Bureau, Milestones 2002 (2002).
1094 JOURNAL OF WORLD TRADE

significant research and development (R&D) efforts and already applied for patents for
some drugs in the United States and the EU.46 At the same time, stronger patent
protection and lower tariff rates47 are likely to result in greater imports of patented
pharmaceuticals, resulting in greater use of protective anti-dumping measures by
domestic manufacturers. Already, the pharmaceutical industry is one of the most active
users of anti-dumping measures, though most initiations are attributable to imports
from China.

C. TEXTILES

The Indian textile sector accounts for 33 percent of the country's foreign exchange
earnings, and for 20 percent of industrial production.48 The most significant event for
the textiles sector was the phasing out of all textile quotas by the Agreement on Textiles
and Clothing (ATC) in 2005. Under this Agreement, WTO Members had agreed in
1995 to slowly eliminate the quotas that were in place for export of textiles from
developing countries to developed countries under the Multi-Fibre Agreement. Since
India has a comparative advantage in textile manufacturing, particularly cotton-based
fabrics, due to factors such as low labour costs and having the largest acreage of cotton
production in the world, exports of these products are expected to rise significantly.
The removal of textile quotas is therefore unlikely to result in any increase in anti-
dumping initiations by the domestic industry while it may greatly increase India's
textile exports being subject to anti-dumping measures abroad. To protect itself from
this possibility, India and some other developing countries are lobbying for a
moratorium on anti-dumping measures for two years from 2005.49

VI. REFORMING THE SYSTEM

Despite the various criticisms of anti-dumping, it remains a popular trade measure

in the international trade arena. There is no talk of elimination of anti-dumping in the
WTO, as evidenced by the fact that though the Doha Declaration envisages
negotiations on amending the Anti-dumping Agreement, it does so only in the
context of maintaining its basic features.50 As India emerges as an increasingly
important market, and envisages a greater role for itself in the international trade scene,
greater scrutiny of its anti-dumping decisions is likely. Indeed, recently three countries
have sought consultations under the rules of the WTO Dispute Settlement

46 Indian Drug Manufacturers' Association, WTO Agreement on TRIPS, at <www.idma-assn.org/

Patents.html> (visited 8 December 2004).
47 The Government of India Union Budget 2005±06 reduced the peak customs tariff rate to 15 percent.
48 Government of India Union Budget 2002±03.
49 Muhammad Saeed, India, Others Seek 2-Year Moratorium on Dumping Probes into Textiles, 16 The World
Trade Review 3 (2003).
50 Paragraph 28, Ministerial Declaration adopted on 14 November, WT/MIN(01)DEC/W/1, 20 November 2001.
 ANTI-DUMPING IN INDIA 1095

Understanding51 regarding India's anti-dumping decisions, including one by the EC

where it has alleged a number of shortcomings in the manner by which anti-dumping
findings are made by the DGAD.52 While it remains to be seen if any of these
consultations result in disputes before the WTO Panel, in the context of such increased
scrutiny of the Indian anti-dumping measures and the unlikelihood of any significant
reform at the WTO level, reform in the manner of use of anti-dumping measures by
India is necessary in order to make it more transparent.
First, the DGAD must produce more detailed decisions in contrast to its current
decisions that often provide little discussion and details as to the reasoning behind the
findings. More detailed decisions that explain clearly the reasoning followed by the
authority in reaching its conclusions could greatly assist in demonstrating before the
WTO Dispute Settlement Body that its actions are justifiable, should a dispute arise.
Second, as part of an attempt to provide more detailed decisions, the DGAD must
consider with greater care the aspect of ``public interest''. It must take into account not
only the interests of the domestic industry, but also take into account the interests of the
final consumer who might benefit from cheaper imports, as well as the intermediate
industry users of the imports. The current situation of most Indian industry petitioners for
anti-dumping measures holding dominant market positions indicates the protectionist
nature of anti-dumping. ``Public choice theory'' predicts that policy-makers will be more
concerned about trade impacts on producers than on consumers because the former are
both better organized and more influential than the latter.53 Thus, when providing anti-
dumping protection, governments are more concerned about the well-being of domestic
producers who carry greater lobbying power, than consumers who are dispersed and have
limited ways of making their voice heard or even having a collective interest. The DGAD
should make a conscious effort to change this situation and undertake a more balanced
examination that takes into account the concerns of consumers.
As a related aspect, the Indian government should consider separating the DGAD
from the Ministry of Commerce and Industry. While creating a separate tribunal may
involve some cost, it would provide greater independence of the anti-dumping
authority from political pressure and influence. Currently, the DGAD is under the
complete supervision of the Ministry and the government's advocating anti-dumping as

51 Article 4 of the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes.
52 IndiaÐAnti-dumping Measures on Certain Products from the EC (Request for Consultation), G/ADP/D51/1, G/L/
666, WT/DS304/1 (WTO 11 December 2003). The EC alleges in as many as 27 anti-dumping findings that,
among other things, the determination of the effect of dumped imports on prices by the DGAD does not seem to
be based on positive evidence and an objective examination; that the DGAD did not demonstrate that the dumped
imports were causing injury; and that the DGAD did not satisfy itself of the accuracy of the information on which it
relied. The other two cases involve one by Taiwan which makes allegations similar to those of the EC based on
seven anti-dumping findings by the DGAD: IndiaÐAnti-dumping Measures on Certain Products from The Separate
Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Request for Consultations), G/ADP/56/1, G/L/702, WT/
DS318/1 (WTO 1 November 2004); and the other by Bangladesh on anti-dumping duties levied on Lead-Acid
Batteries: IndiaÐAnti-dumping Measure on Batteries from Bangladesh (Request for Consultations), WT/DS306/1, G/L/
669, G/ADP/D52/1 (WTO 2 February 2004).
53 Trebilcock, as note 28 above.
1096 JOURNAL OF WORLD TRADE

a useful option for industries that are harmed suggests that the existence of anti-
dumping measures fulfils more a political role than providing a legal remedy.
Third, the DGAD must be cautious when using the ``material retardation to the
establishment of domestic industry'' standard of injury especially since the standard
lacks any elaboration in the Anti-dumping Agreement. It must avoid using the standard
as a ``catch-all'' simply to find a way to provide anti-dumping protection to the
domestic industry.
Finally, the government should realize that anti-dumping on the whole reduces
welfare,54 and take steps accordingly to eliminate its use at the bilateral and multilateral
levels. India is examining the possibility of entering into regional trade agreements
(RTAs) with numerous countries, and is currently holding talks with Thailand,
Singapore, Brazil, and other ASEAN countries. The elimination of anti-dumping from
RTAs, as has been successfully done in the case of the ANZCERTA (Australia±New
Zealand Regional Trade Agreement) and the Canada±Chile Trade Agreement, would
be a significant milestone. If India continues to use anti-dumping measures prolifically,
the possibility of its taking a strong stance against the use (and abuse) of anti-dumping
by developed countries is reduced. India has in the past accused developed countries of
misusing anti-dumping, but with its ever-increasing use, it would have little ground to
seek wide-ranging amendments moving closer towards the elimination of these
measures. At the very least, India should make known its intention of attempting to
negotiate towards ultimate elimination of this protectionist mechanism that violates the
principles of free trade.

VII. CONCLUSION

India has rapidly grown from imposing its first anti-dumping measure in 1992 to
becoming the largest user of these measures in the past few years. While data suggest
that the trigger was the removal of quantitative restrictions on imports, the continued
reduction of import tariffs has played an important role in sustaining this high use of
anti-dumping measures. As successive Indian governments pursue the policy of
reducing peak tariff rates to about 5±10 percent, the trend of initiating a large number of
anti-dumping investigations is likely to continue. While this may sound ominous, one
of the strongest non-economic rationales for the continued popularity of anti-dumping
measures is that it functions as an effective political tool for building support for global
trade.55 The argument therefore is that anti-dumping promises a certain degree of
protection to domestic players and thereby convinces them to accept greater, more
wide-ranging, and beneficial, trade liberalization.56 Anti-dumping laws are seen as an

54 See Bernard Hoeckman, Competition Policy and the Global Trading System: A Developing Country Perspective
(Washington, D.C.:, Oxford: Oxford University, 1997).
55 Boltuck and Litan, as note 6 above, p. 13; Dale, as note 6 above, p. 34.
56 Greg Mastel, The US Steel Industry and Anti-dumping Law, at <http://www.econstrat.org/challenge.htm>
(visited 21 November 2004).
 ANTI-DUMPING IN INDIA 1097

assurance that the increased free trade will be fair and that temporary relief would be
provided to domestic players who are adversely affected. Increased use of anti-dumping
and the reassurances of the Government of India of protecting domestic industry
through measures including anti-dumping duties are a reflection of this.
India's liberalization of trade and economic policy has occurred over a relatively
short period of time (China started its process of liberalization in 1974, almost two
decades before India did), the continuation of this pace of reforms in the near future and
the need for adjustment of the domestic industry are perhaps what best explain India's
significantly increased use of anti-dumping, and also suggest its continued large use. As
the trend towards prolific use of anti-dumping measures continues, the findings
rendered by the DGAD are bound to receive greater scrutiny. Reform of the manner in
which the DGAD arrives at its findings, as well as moving towards elimination of the
use of these measures, is therefore imperative.