Complaints of dumping, or exports to India by foreign producers at below their domestic prices, are mounting. This is cause for concern, though indigenous user industries (of steel, for example) are happy. While there is little evidence of a consequent rise in exports by India's downstream industries or of price cutting in final goods in the home market, dumping has hurt a number of domestic majors: notably in steel and chemicals. The Indian government remains lackadaisical (a developing country malaise). The standard argument is that acting against dumping is by no means easy. The World Trade Organisation's do's and don'ts are freely bandied about to feign helplessness. What the government, especially the Commerce Ministry, must explain is why it does not take a leaf out the anti-dumping book of the quick-footed United States, which too is a member of WTO.

The popular notion that India has become a dumping ground following import liberalisation may not be correct. Theoretically, the CIF cost plus import duty (at the current reduced level) price a foreign good on par with the domestic product. But the Indian producer cannot match dumped import prices. High cost China, for example, sells to India at prices well below its domestic prices. China gets away with this because it is not a member of WTO; besides, it is a pet of USA. The developed countries have built up a massive capital stock, but faced with inadequate domestic (that is, OECD) demand, they have to cope with excess capacity. They dump goods in the developing countries in a bid to cross (however modestly) the breakeven point in capacity utilisation. Sure enough, they violate WTO rules. But WTO is no saviour of developing nations. When it comes to enforcing rules, WTO is on the side of the rich industrialised nations.

India must get its act together. Business and industry should join hands in ferreting out hard data. They must sensitise the government to dumping, and present a water tight case for quickly imposing anti-dumping duties, whenever these are warranted.

Above all, New Delhi must stop pandering to lobbies of downstream industries; this is the raison d'etre for turning a blind eye to dumping. The government would serve the cause of user-industries far better by reducing excise duties.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.