What is Dumping?

No.. Neither am I talking about dumping of garbage here & there nor about dumping your old stuff. A very popular term in economics is dumping. It is the name given to the phenomenon of exporting goods to another country at a price either lower than the own country or lower than the cost of production of the good.  For example, if an Indian T.V company sells its product at Rs. 20000 here and it sells the same product for Rs. 17000 in Nepal then that’s dumping. One identifies dumping simply by comparing prices in two markets.

There are many opinions to this phenomenon. Some consider it to be correct as to them it means that a country is making cheaper imports. Though, my viewpoint differs. Importing cheap goods and dumping have a major difference. Cheap imports means that those goods will be available cheaply everywhere. Dumping means that we are providing our goods cheaply to other countries, these benefits of lower prices could be given to own country. As well as for the country importing them it has an impact on the domestic industry. Due to this countries have Anti-Dumping Agreements.

These agreements allow the government to act against dumping where the domestic industry is getting affected. To do this, government has to show that dumping is taking place as well as calculate the extent of dumping. There are various methods available for making such calculations. Anti-dumping investigations are to end immediately in cases where the authorities determine that the margin of dumping is insignificantly small. But to take some actions just calculation of the extent of dumping is not enough, government has to prove that it is affecting their domestic industry. Once this is proved only then some steps could be taken.

Section 9, 9A, 9B, 9C of the Customs Tariff Act provides the legal framework for Anti-Dumping, Anti-Subsidy and Safeguard measures in India.

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