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Cover Story | December 2014

DUMPED!

Dumping is a two-way traffic. ´Dumpers´ are victims themselves at times. For the global textile industry, which has come a long way since dismantling of quotas in 2005, this is a disputable irritant that rears its ugly head now & then. The Indian Textile Journal digs out some views from the heaps of the recent dumping cases.

Dumping hurts, but anti-dumping duty (ADD) hurts deeper, when it is unfair. The line that separates the fair from unfair practices in both cases is so wafer-thin that it is almost invisible. A Mumbai-based government-recognised export house tempted by a booming viscose rayon and polyester-blended market in Peru some time ago, tried to export, but found the experience bitter. Its consignment attracted over $2 per kg of ADD, which the company´s Director (who prefers anonymity) says is too high for a medium-sized company like theirs. So, once bitten, they shied away forever. He says ´Universal Textiles in Peru has influence with the government and they convinced the government to slap the ADD.´ He adds that ´to fight such cases you need money for lawyers and more time to spare, so the company realised it is better to quit. Peru manufactures and supplies to its neighbouring countries similar textile products in India and it is clearly a protectionist measure to safeguard their own interests.´

´If your domestic industry is competitive and is really affected by cheaper and highly discounted products from other countries, then it is legitimate to levy ADD. But in Turkey it is the other way round,´ says Anil Rajvanshi, Senior Executive Vice President, Reliance Industries Ltd, who is also the Vice-Chairman of the Synthetic Rayon and Textile Export Promotion Council (SRTEPC).

Indian textile industry´s dream journey on the way to achieving the export target of $300 billion by 2025 is facing the threats of a derailment including a few countries´ move to clamp ADD on exports of some of the products. The synthetic textile industry is likely to bear the brunt as Turkey is on the offensive slapping ADD on synthetic textile products coming from India. Incidentally, Turkey is the second biggest export market for the India´s synthetic textile industry.

What does World Trade Organization (WTO) say about dumping & anti-dumping?
According to WTO, if a company exports a product at a price lower than the price it normally charges in its own home market, it is said to be dumping the product. Anti-dumping action means charging extra import duty on the particular product from the particular exporting country in order to bring its price closer to the normal value so as to remove the injury to domestic industry in the importing country.

Anti-dumping measures can only be applied if the dump hurts the industry in an importing country. Therefore, first a detailed investigation has to be conducted according to specified rules, which must evaluate all relevant economic factors that have a bearing on the state of the industry in question. If the investigation shows dumping is taking place and domestic industry is being hurt, the exporting company can undertake to raise its price to an agreed level in order to avoid anti-dumping import duty.

It also involves cooperation by all the companies in a country against whom a country has charged with dumping. In this SRTEPC had a bad experience. ´When investigations by a foreign company is on, even some of the important members of our organisations refuse to cooperate and supply the necessary details of production, etc., which further adds to the problems´, says an SRTEPC source.

India´s textile and apparel industry is estimated at $89 billion in 2011 and is projected to grow at a CAGR of 9.5 per cent to reach $223 billion by 2021. Domestic textile & apparel market is worth $58 billion, which has a<

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