Anti-Dumping Duties: A Comparative Study of India and China

International trade represents a state of delicate equilibrium, where nations strive to protect their domestic industries while engaging within competitive global markets. Dumping—selling goods in foreign markets below domestic prices—is a strategy nations often employ to gain competitive advantage. In this context, 'competitive advantage' means the ability to outperform rivals in cost, quality, or innovation. While this tactic can help in securing a foothold in foreign markets, it may also lead to destabilization of local industries in the importing countries.

This practice promotes instances of unfair competition, which is why nations often employ actions to counteract dumping. These actions are known as anti-dumping measures, and have become the most frequently used trade remedies globally, as recognized by the World Trade Organization (WTO). These measures play an important role in protecting the national interests, while maintaining a balance between domestic priorities and global trade fairness. As a result, in a report by the WTO it was found that the anti-dumping measures continued to be the most frequent trade action adopted by the G-20 economies. The report mentioned that these measures comprised of 80.9% of all initiations and 96.6% of all terminations, which raises questions about the evolving role of anti-dumping laws in international trade.

These statistics signify the importance of anti-dumping measures, and each country has its own strategy to effectively deal with such situations. There are nations like India and China who have completely distinctive approaches. While India uses anti-dumping measures to protect domestic industries like chemicals, steel, and rubber, China incorporates them into a broader geopolitical strategy to secure long-term global competitiveness and market dominance. This is why examining their distinctive strategies is necessary, and would give valuable insights into how these regulations influence global trade and align with national economic strategies.

Anti-Dumping Provisions in Practice:

Implementation of anti-dumping measures follow a structured process under international trade rules, particularly outlined by the Article VI of the General Agreement on Tariffs and Trade (GATT)1994, which allows nations to impose restrictions on dumping. Under this provision, countries can impose anti-dumping duties (ADDs) on imports, in cases where certain conditions are met. These conditions are mentioned under the Agreement on Implementation of Article VI of the GATT, 1994 (Anti-Dumping Agreement).

The aforementioned agreement further supplements the Article VI of GATT, and expands its implementation. The agreement establishes that in order to impose anti-dumping duties, a country must first conduct a thorough investigation to prove that dumping is occurring and that it is causing material injury—such as significant job losses, reduced production output, or a decline in industry competitiveness—to its domestic industry. There should also be a causal link between the dumping process and the material injury, proving that the injury is a consequence of the dumping activity.

According to the WTO, anti-dumping measures are now among the most prevalent non-tariff barriers. India, which initiated its first anti-dumping investigation in 1992, has filed over 300 such cases, primarily against Chinese imports. This is part of a broader trend, as countries like the USA and members of the European Union also frequently target Chinese products.

Balancing Benefits and Challenges:

Anti-dumping laws protect domestic industries from unfair trade practices but can also disrupt global trade dynamics and provoke retaliatory actions. For instance, during the EU-China solar panel dispute, China countered by targeting European wine exports, showcasing how anti-dumping measures can escalate trade tensions. 

In India, such laws primarily target Chinese goods to safeguard sectors like textiles, electronics, and pharmaceuticals. However, these measures have also increased costs for Indian industries reliant on imported materials, forcing businesses to diversify sourcing strategies. This dynamic highlights the complexity of using anti-dumping laws to balance domestic priorities with global trade relations.

India’s Approach:

In June 2024, India imposed ADDs  on several Chinese products, including items like hydraulic rock breakers. There were similar duties imposed in 2021 on products like trailer axles, flat-rolled aluminium, and refrigerant components, and more. In fact, in a 2024 report by Global Trade Research Initiative (GTRI), it was found that from the financial year 2019-2024, 60 percent of the anti-dumping duties were imposed on products from China. The other 26 percent consisted of China along with at least one other country. The Directorate General of Trade Remedies (DGTR), under the Department of Commerce in India, concluded that these products were being exported at prices below their normal value in Indian markets, and were therefore affecting the domestic industry.

India's anti-dumping policies extend beyond China to address unfair trade practices globally, involving countries like Indonesia, Korea, and the U.S.? However, India’s ADD policies can be considered less assertive compared to China's due to their primarily reactive and protective nature. They also primarily focus on creating a competitive balance rather than actively challenging competitors at international forums.

China’s Strategy :

In 2024, China also imposed ADD on the import of an Indian chemical o-chloro-p-nitroaniline at the rate of 31.4-49.9 percent. However, as mentioned earlier China’s approach to ADDs is usually quite different from India’s. China has generally sought to maintain its export-driven growth model and has responded to anti-dumping measures with both policy adjustments and formal disputes through the WTO. China has used its own anti-dumping laws selectively, generally to defend vital industries like steel and solar technology against cheaper imports from countries like Japan and the USA. By doing so, China protects its industrial base while maintaining its export competitiveness—for instance, by subsidizing key industries, investing heavily in research and development, and diversifying its export markets.

The Contradictory Priorities:

India's anti-dumping measures targeting Chinese products, particularly steel, have been part of a strategic effort to shield its growing domestic industry and manage the trade imbalance. There have been instances of ADDs on steel products from Vietnam and Thailand as well, to ensure that the Indian steel manufacturers gain market stability and to counter the downward pressure on prices. In fact, India is mulling over imposing additional taxes ranging from 15%-25% on steel from China, to protect the domestic industries.

However, there have been mixed results over the effectiveness of anti-dumping policies in India. In certain sectors, imports of commodities like iron, steel, chemicals, and rubber dropped by 54% within two years following the imposition of duties, yet imports for the 46% of other commodities remained the same. This indicates that while ADDs work well in specific industries, their influences can be limited depending on the market dynamics.

China’s approach to anti-dumping policies is closely tied to its long-term economic ambitions such as maintaining its dominant role in global manufacturing and expanding its geopolitical influence. Rather than using these duties as a defensive mechanism, China integrates them into a larger grand strategy aimed at sustaining political influence and securing market share in strategic sectors. This strategy goes beyond merely defending against trade imbalances; it involves selectively using trade policies, including anti-dumping measures, to maintain and expand market share in critical industries—all while avoiding actions that could trigger major trade disputes or escalate geopolitical tensions. This selective application of anti-dumping measures allows China to strengthen its industrial base without triggering extensive trade conflicts that could compromise its export-driven economic model.?

Balancing National Protection with Global Trade Fairness:

In conclusion, anti-dumping measures are essential tools for India and China to protect their domestic industries from unfair trade practices. India’s approach centres on safeguarding local industries like steel and chemicals against low-cost Chinese imports, with mixed effectiveness across sectors. Conversely, China uses anti-dumping duties selectively, aligning them with its broader economic and geopolitical strategy. Both countries illustrate the complex balance between protecting national interests and engaging in global trade practices that adhere to internationally recognized standards, such as those set by the WTO. As trade dynamics evolve, it would be interesting to look at how India and China refine their strategies to sustain economic growth while ensuring international competitiveness and compliance with global trade norms.