DECOUPLING DILEMMA

AS TENSIONS BETWEEN INDIA AND CHINA THAW AND THE TRADE BETWEEN THEM GROWS, INDIA FACES THE TOUGH TASK OF KEEPING CHEAP CHINESE IMPORTS AT BAY WHILE ENCOURAGING THOSE THAT ITS DOMESTIC INDUSTRY NEEDS

- M.G. ARUN

The meeting between Prime Minister Narendra Modi and Chinese president Xi Jinping on the sidelines of the BRICS summit in Russia in October may have signalled a thaw in border tensions, but India has been exercising caution in bilateral trade relations, having imposed a series of anti-dumping duties on imports from its northern neighbour this year. The country has also vowed to keep necessary checks on foreign direct investment (FDI) from China, a stance it took to protect national interests following the border stand-off at the icy heights of Ladakh's Galwan in 2020. But with China overtaking the US as India's largest trading partner in the first half of this fiscal, experts feel, the Modi regime is facing an uphill task.

In international trade, dumping happens when a country or manufacturer sells a product in an importing country at a lower price than the normal price in its own domestic market. Under the World Trade Organization (WTO) arrangement, the other country can impose anti-dumping duties on imported goods if it is established that this flooding of cheaper products is "injuring" its domestic producers. In India, the domestic industry concerned can file an application for investigation to the Directorate General of Anti-dumping and Allied Duties, under the ministry of commerce and industry. In 2023, India initiated 45 such investigations against imports from various countries and imposed duties in 14 cases, making it the second largest user of anti-dumping measures after the US. Between January and September this year, India has launched 34 more investigations. Chinese imports feature in 15, or 44 per cent, of them (see Anti-dumping Crackdown).