Commerce Ministry wants stricter rules on trade remedies to be implemented soon

Amiti Sen New Delhi | Updated on December 23, 2019 Published on December 23, 2019

Will ask Department of Revenue to notify change in ‘lesser duty rule’ to impose higher duties on cheaper imports

Seeking early action on its proposal to remove the ‘lesser duty rule’ that would allow harsher duties against dumped and subsidised imports, the Commerce Ministry has decided to pursue the matter with the Department of Revenue.

“Early action needs to be taken on doing away with the lesser duty rule so that higher anti-dumping and countervailing duties can be imposed on cheap imports hurting domestic producers. The Commerce Ministry is taking up the matter with the Revenue Department so that the final notification is expedited,” a government official told BusinessLine.

The lesser duty rule states that in case of imports, once dumping or subsidies are established, the penal duty imposed on the item may be less than the margin if such lesser duty would be adequate to remove the injury to the domestic industry.

“Because of the lesser duty rule at times India ends up imposing lower penal duties on dumped or subsidised imports than what the margin of dumping and the subsidies call for. This leads to our domestic industry getting lower protection than what it is acceptable globally. The amendment proposed by the Commerce Ministry is aimed to change this,” the official said.

In September, the Commerce Ministry approved amendments in the rules of trade remedies such as anti-dumping, countervailing or anti-subsidy and safeguard to do away with the lesser duty rule. There is no problem with the proposed move at the multilateral level as the lesser duty rule is not mandatory under the World Trade Organization provisions.

A large number of WTO members, including the EU, do not use the lesser duty rule and impose anti-dumping and countervailing duty to the full extent of dumping and subsidy margins.

Domestic producers

“The Commerce Ministry wants to convince the Revenue Department that there is a need for early notification of the amended rules as India’s domestic producers are taking a hit due to cheap imports in a large number of sectors ranging from steel and chemicals to solar cells and panels,” the official said.

Anti-dumping duties

India has imposed anti-dumping duties on about 100 items imported from China as the neighbouring country, which runs a trade surplus of over $60 billion annually with India, is the largest source of cheap imports.

Anti-dumping and countervailing duties are also a source of revenue for the government. The Centre raised ₹765.37 crore through anti-dumping duties in the first eight months of the fiscal year, as per government figures. In 2018-19, it raised ₹1,307.35 crore through such duties.

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Published on December 23, 2019
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