A recent report by the Centre for Domestic Economy Policy Research and the Centre for WTO Studies has reopened an old trade policy question. Can India continue to absorb low-cost imports without damaging domestic manufacturing capacity? The report argues that India could save nearly $3 billion a year in foreign exchange if all pending anti-dumping duty recommendations are implemented. It comes at a difficult moment: trade uncertainty has risen, commodity prices remain volatile, and geopolitical tensions are adding pressure on the external sector.
The Directorate General of Trade Remedies had recommended anti-dumping duties on 56 products. Their non-implementation, according to the report, has caused an annual loss of nearly Rs 2,000 crore to domestic industry.
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Anti-dumping duties and India’s trade dilemma
Anti-dumping duties have always divided opinion. Industry groups see them as safeguards against predatory pricing by foreign exporters. Critics see them as instruments that raise costs, weaken competitiveness and protect inefficient firms from global competition. Domestic industry’s main concern is China, whose manufacturing scale and export pricing have unsettled several Indian sectors.
Anti-dumping duties are allowed under World Trade Organisation rules. They are imposed when imported goods are sold below their normal value and cause injury to domestic producers. Unlike general tariffs, they are product-specific and country-specific. This distinction matters: anti-dumping duties are trade remedies against unfair pricing, not a general tariff wall or a substitute for industrial policy.
In India, the process begins when domestic manufacturers approach the DGTR with evidence of unfair pricing. The DGTR investigates and recommends duties. The finance ministry takes the final decision.
India is among the world’s most active users of anti-dumping measures. Over the past two decades, sectors such as steel, chemicals, textiles, electronics and pharmaceuticals have sought relief from low-priced imports. Much of the pressure has come from Chinese goods, given Beijing’s dominant position in global manufacturing supply chains and growing concerns over industrial overcapacity.
According to the report, India implemented almost all DGTR recommendations until 2020. Since then, implementation rates have weakened, even as imports
from China rose in several sectors. The government’s caution rests on a familiar concern: excessive use of anti-dumping duties can raise inflation and hurt downstream industries that depend on imported inputs.
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Inflation risk may be overstated
The inflation argument is the strongest case against anti-dumping duties. Consumer goods, automobiles, engineering products and electronics rely on imported intermediate goods and raw materials. Higher input costs can move through supply chains and reach retail prices. The pandemic-era inflation shock has made policymakers wary of any measure that raises production costs.
The report challenges this concern. It examines 21 products for which anti-dumping recommendations are pending. Even if half the duty-related cost increase is passed on to consumers, the effect on headline inflation would be negligible, it argues. Most products are industrial chemicals, fibres, polymers and intermediate inputs with low weight in the Consumer Price Index basket. Downstream processing, logistics, taxes and substitution would further dilute the final price effect.
This is the strongest part of the case for selective action. A limited rise in short-term costs may be acceptable if it helps preserve domestic capacity. The production-linked incentive schemes, import-substitution efforts and the government’s self-reliance agenda already accept this trade-off in strategic sectors.
Protection cannot become industrial policy
There is still a risk. Trade protection can breed inefficiency. Firms shielded from foreign competition may have weaker incentives to innovate, improve productivity or upgrade technology. Over time, this can hurt export competitiveness and increase dependence on continued state support.
Supporters of anti-dumping duties argue that the issue is not protectionism but fairness. They say foreign producers often benefit from hidden subsidies, state-backed finance, cheap energy and artificially low export prices. Indian manufacturers, especially small and medium enterprises, often lack the scale and balance-sheet strength to survive such undercutting. In these cases, trade remedies become a tool to preserve industrial diversity and employment.
The steel sector shows the dilemma. Indian steelmakers have repeatedly sought protection against imports from China, South Korea and other countries during periods of global excess capacity. Industry argues that without temporary relief, domestic plants face lower utilisation, weaker profits and reduced investment capacity. Similar concerns have emerged in chemicals and synthetic fibres, where producers say cheap imports threaten local manufacturing ecosystems.
India must also account for external scrutiny. Its growing use of tariffs and non-tariff barriers has drawn criticism from trading partners. A country seeking a larger role in global supply chains cannot ignore such concerns.
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Yet the global context has changed. The United States and the European Union have expanded tariff and subsidy mechanisms in clean energy, semiconductors and advanced manufacturing. The report notes that anti-dumping duties in the US can exceed 600% in some cases, while Chinese duties on some intermediates cross 160%. By that yardstick, India’s measures look restrained.
Trade policy must be evidence-led
The real question is not whether India should use anti-dumping duties. It is how they should be designed. The distinction must be clear: temporary protection that enables industrial upgrading is defensible; permanent protection that rewards inefficiency is not.
A public-interest test should therefore be built into every major anti-dumping decision. The government must weigh gains to domestic producers against costs to downstream users, employment, exports and investment. Duties should also carry strict sunset discipline. They must expire unless a fresh review shows continuing dumping, injury and wider economic justification. Without such limits, a trade remedy can quietly become permanent protection.
India needs to reduce dependence on low-cost imports. It cannot, however, retreat into protectionism. Its export ambitions depend on competitive integration with global supply chains. Anti-dumping duties should therefore be imposed only where there is clear evidence of unfair pricing, measurable injury to domestic producers and limited damage to downstream users.
A sensible trade remedy regime would be firm but narrow. It would protect industry from predatory imports without becoming a substitute for productivity, technology and scale. That is the balance India must now attempt.