It is an additional charge imposed by govt. on a product exported to their country in order to “discourage “ the dumping of that particular product or to “protect” their domestic industry or market (which is supplying the same product). This is done in sense of establishing a equal competition for both domestic and foreign market.
What is dumping ? why it has became an havoc for domestic Industries & Market?
If a country/company exports a product at a price much lower than other country’s normal/average price of the same product in its domestic market . This will led to enormous supply of the product to the importing country due to availability of the same product at much cheap price & this huge and injurious supply is called Dumping. The continuous dumping gradually depreciates the domestic market of the country , to which it is being supplied . This may have hazardous consequences like –
Example: china is big exporter of machinery (say “Lathe machine”). If china starts supplying the lathe machine in India at 1.5 lacs , of the same specifications lathe machine in Indian market it is available at an average price of 2 lacs. So here china has made a quite big gap in price of 50,000 , this will promote the buyers to purchase only their lathe machine. This situation will gradually depreciate the domestic market & industry of the India who are manufacturing & selling the same product.
Recently the Indian govt. has extended an “Anti-Dumping Duty” on 93 products of china , these products belong to broad group of chemicals & petrochemicals, products of steel and other metals, fibers & yarn, machinery items, rubber or plastic products, electric or electronic items and consumer goods, among other
So to meet the challenge of Dumping of product an “Anti Dumping Duty” is imposed as an action to protect our domestic industries & market by discouraging that particular export. This makes the prices of the dumped product lie near the normal price of domestic market.
But there are some norms and legal process for applying anti dumping duty , so that no unnecessary duty get imposed. Th e W.T.O. (world trade organisation) agreement allows, in reference of article 6 of GATT, the govt. of the countries to act against dumping whenever there is genuine injury to competing domestic industry.
There are various procedure to know the insertion of Dumping & its intensity either product is being dumped normally or heavily. This can be done on the basis of comparison of prices , by calculating price of the product being imported to the affected country and price of the same same product in exporter’s country. Also by calculation of expenses in manufacturing and transport .