Dhruv GuptaPartner
Bhargav MansattaCounsel
Bhava SharmaConsultant
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Introduction
The Directorate General of Trade Remedies (DGTR), under the Ministry of Commerce, investigates issues concerning the ‘dumping’ of products into India.
Often, Indian domestic producers have sought the imposition of anti-dumping duty on import of products into India to protect domestic markets. Till the year 2019, recommendations from the DGTR to impose anti-dumping duties were rarely rejected by the Ministry of Finance (MoF). However, from 2020 till mid-2023, there was a notable shift in this practice. The MoF rejected a majority of recommendations made by the DGTR during this period. This raised concerns across industries.
However, from mid-2023 onward, there has been another change in trend with the MoF accepting almost all recommendations for imposing anti-dumping duties, suggesting a return to the previous position. This article discusses the impact of the initial change in the approach on domestic producers and charts the way forward.
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Overview of trends in the imposition of anti-dumping duty
Trend from 1995 till 2019 - acceptance is the norm
The anti-dumping framework was instituted in 1995. Since then, till the year 2019, the recommendations of the DGTR to impose anti-dumping duty on products had rarely been rejected by the MoF. In fact, from the data examined, out of the 1,039 recommendations, only seven faced rejection (less than a 1% rejection rate).
Trend from 2020 till mid-2023 - rejection without providing reasons
The year 2020 saw a change in this trend that was a cause for concern. The MoF started rejecting most recommendations of the DGTR. From 2020 till mid-2023, 74 out of approximately 130 recommendations were rejected (more than a 50% rejection rate).
In many cases, the MoF merely issued an office memorandum to convey its decision to not accept the recommendation, without providing any reasons for the rejection.
Domestic producers aggrieved by this stance of the MoF challenged its decisions before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The CESTAT observed these decisions to be illegal and violating the principles of natural justice since no reasons had been provided by the MoF for its decisions. However, the order of the CESTAT was challenged by the MoF before the Delhi High Court. The High Court observed that the issue arising for consideration before it was essentially whether the office memorandum issued by the Union of India/MoF constituted a legislative act or not. The issue is currently pending adjudication before the Delhi High Court. Further, the Delhi High Court has passed an interim order for provisional assessment of goods under anti-dumping investigation.
Trend from mid-2023 onward - back to the conventional approach of acceptance
While the High Court’s decision is still awaited, an analysis of recent data shows that the MoF has gone back to accepting almost all recommendations of the DGTR. It accepted 22 out of 24 recommendations made between July 2023 to July 2024. This is in stark contrast with the intervening trend discussed above.
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Way forward
The legality of the MoF’s decision to reject recommendations of the DGTR without providing its reasoning is currently an open question.
MoF’s return to accepting recommendations is a favourable trend for Indian industry. Further, since mid-2024, there has been an interesting trend where domestic producers are requesting the initiation of fresh investigations on products for which the DGTR’s recommendations had not been accepted from 2020 to mid-2023. For example, MoF had rejected the recommendations of DGTR for imposition of anti-dumping duty on products such as textured tempered glass, aluminium foil, glass fibre, acrylonitrile butadiene rubber, etc., from 2020 till mid-2023. Anti-dumping investigations on these products have been re-initiated by DGTR in 2024 based on applications filed by domestic producers.
While the initiation of these investigations afresh is a positive development for domestic producers, there is a risk of potential conflict between the pre-existing recommendations of the DGTR (that may be implemented pursuant to the decision of the High Court in ongoing disputes), and the fresh recommendations issued by DGTR pursuant to the initiation of fresh investigations. The possibility of such conflict could arise in 2025 when the fresh investigations will be nearing conclusion and the pending dispute before the High Court may also be decided. There is no precedent for this situation, and it remains to be seen how the issue will finally be resolved.
