Commerce minister Nirmala Sitharaman. Photo: Pradeep Gaur/Mint
Commerce minister Nirmala Sitharaman. Photo: Pradeep Gaur/Mint

New Delhi: India is contemplating the merger of two bodies that handle anti-dumping and import safeguard actions, seeking to counter protectionist measures imposed by developed economies at a time when world trade has shrunk because of tepid demand.

Anti-dumping and countervailing measures in India are administered by the Directorate General of Anti-Dumping and Allied Duties (DGAD), which functions under the commerce ministry; safeguard actions such as temporary restrictions on the import of a product or higher duties come under the ambit of the Directorate General of Safeguards, which functions under the finance ministry.

The commerce ministry has proposed merging these two bodies into one called the Directorate General of Trade Remedies (DGTR), which will be similar to the US International Trade Commission (USITC).

The commerce ministry has taken up the matter with the finance ministry and will hold discussions soon, a senior official said on condition of anonymity.

“We want to ensure that this country is not a victim of too much protectionist measures by other countries at a time of slowdown in global trade. We want to put all the trade remedy options under one umbrella and build up expertise,” the commerce ministry official said.

The US imposed countervailing duty (CVD) on import of hot-rolled carbon steel flat products from India in 2012. India dragged the US to the World Trade Organization (WTO) dispute settlement panel, but only got a mixed judgement on the matter.

The panel issued a complex ruling in which it disagreed with India’s challenge against an earlier ruling that upheld the US’s countervailing measures.

The US has again taken a preliminary decision to impose CVD on cold-rolled steel from four countries including India.

“We are well above the global import prices. How could we be dumping anything? Every country is now trying to protect their manufacturing,” the commerce ministry official cited above said.

Anti-dumping duties are imposed if a country dumps goods in another country at a much cheaper price than it normally charges in its own home market. Countervailing duties are levied on imported goods to offset export subsidies offered to producers in the exporting country.

Safeguards are imposed as emergency measures to limit imports of goods temporarily if its domestic industry risks being harmed by a surge in imports.

Bringing all trade remedies under one roof will lead to better coordination, said Jayant Dasgupta, executive partner at Lakshmikumaran and Sridharan, a law firm that specializes in international trade matters.

“We have a shortage of manpower at present for investigations into measures such as export subsidies, which need strenuous efforts. We need more investigating hands,” added Dasgupta, a former Indian ambassador to the WTO.

DGAD conducts anti-dumping and CVD investigations and makes recommendations to the government on imposition of anti-dumping measures. While the department of commerce recommends anti-dumping duties, it is the ministry of finance which levies such duty.

The Standing Board of Safeguards, chaired by the commerce secretary, considers the recommendations of the DG (Safeguards) and then recommends the imposition of a safeguard duty to the finance ministry, which levies the duty.

USITC, which may be the model for the proposed DGTR, is an independent, quasi-judicial federal agency with broad investigative responsibilities on matters of trade.

“The agency investigates the effects of dumped and subsidized imports on domestic industries and conducts global safeguard investigations. The Commission also adjudicates cases involving imports that allegedly infringe intellectual property rights,” its website says.

The commerce ministry official cited above said the ministry is also trying to fast-track trade remedies. “Industry used to complain India takes the longest time period—around 18 months—to finalize such complaints. Within last five months, we have now brought it down from 18 months average to 12 months. We are looking at how to do trade remedy more effectively,” the official said.

According to the WTO website, India initiated the most safeguard investigations in 2014, seven, followed by Indonesia and Turkey with three each. India also imposed the largest number of final measures—four. India undertook anti-dumping action in 13 cases in 2014, the third highest after Brazil and the US.

The commerce ministry’s proposal comes at a time when India’s exports have shrunk for 15 months in a row amid weak demand in overseas markets.

In April-February, India’s exports contracted 16.7% to $238.4 billion and imports shrank 14.7% to $351.8 billion, leaving a trade deficit of $113.4 billion.