Anti Dumping Duty on Tyres & It’s Impact – A Detailed Study

Dumping Tyres

Dumping – What does it refer to?

Dumping in the goods point of view refers to the process by which a country exports certain goods to another country where there is demand for the product. But, the price at which it exports is less than the price it charges in the home market.

Anti- Dumping Duty- What is it?

The anti-dumping duty can be considered either as a penalty or a protectionist tariff that the country that imports a foreign good imposes when it finds that the product is marked well below the fair market value.

Why is dumping employed?

Dumping can be done by a manufacturer, a group of producers or even a nation. The objective of dumping could vary. Generally, monopolizing the market by driving off competition is what they aim at.

When Anti-dumping duty on tyres was imposed?

Anti-dumping duty has been imposed on the import of certain types of unused or new radial tyres from China that are used for buses and trucks for a period of 5 years starting September 2017. It was imposed to ensure that the domestic manufacturers were protected. It was also a move aimed at curtailing the tactics employed by China that engaged in below-cost shipments.

On what tire imports have anti-dumping been imposed?

The duty holds good for pneumatic radial tyres whether new or old. It includes tyres with or without tubes. Also tubeless tyres and those with or without a flap of rubber. The duty was slapped on tyres the dia code over 16” having a nominal rim that would be used in buses, lorries, and trucks.

What is the range of anti-dumping duty imposed?

The anti-dumping duty on tyres that have been slapped on Chinese exports as per the notification of the Central Board of Excise and Custom (CBEC) is in the range of USD 245.35- 452.33 Per tonne.

What are the events that led to the imposition of anti-dumping duty?

The Automotive Tyre Manufacturers Association (ATMA)  filed an application. The application was on behalf of the domestic manufacturers of tyres. It included the major manufacturers like Apollo, JK, and CEAT. This was followed by investigations by the DGAD or the Directorate General of Anti-dumping and Allied Duties. The manufacturers presented their case.

The DGAD confirmed that that the domestic industry indeed had suffered from a material injury due to the dumping activity of China. DGAD then recommended the levy of anti-dumping duty on tyres. The duty was imposed following the recommendations of the DGAD.

When does a country impose anti-dumping duty?

Anti-dumping duty is imposed when,

  • It is found that any product (tyres here) that are being exported to India from the subject country (here China) are below the normal value.
  • It is imperative for India to take steps to cut the surge in below-cost imports in order to protect the domestic manufacturers.
  • It has to impose to ensure fair or level playing field for the domestic industry.

At the same time, it is important also to note that the idea is not to restrict imports. Again, it should not be done to increase the cost of products using unjustified means too.

How is the dumping duty imposed?

As per the guidelines of the WTO or the World Trade Organization, the national authorities after the investigation can act upon the recommendations of the DRAD. The duties imposed thereafter, however, should be based on the margin of dumping. In other words, it is the difference between normal value and the exported price. This is the norm according to Indian law also.

How has the anti-dumping duty benefitted the industry?

The ATMA chairman asserts that the growth of the industry would touch the highest single digit in the financial year 17-18 and would reach the highest double-digit in FY 18-19.

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