HomeCorruptionChina's Calculated Dumping Move: An Assault on India's Steel Producers

China’s Calculated Dumping Move: An Assault on India’s Steel Producers

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For centuries, international trade has been a testament to the spirit of cooperation and mutual benefit. However, in an era of interconnected markets and global supply chains, some moves can be less than friendly. One such tactic is “dumping,” and recently, India finds itself grappling with this very strategy, employed by its powerful neighbor, China. We consider that this is part of China’s aggressive strategy to exert control over the region.

Understanding Dumping

Imagine a scenario where a country intentionally exports a product at a price lower than its domestic value. This is known as “dumping.” By selling at these “bargain” rates, the exporting country makes it almost impossible for domestic industries of the importing nation to compete. Over time, this can erode the foundation of these domestic industries, forcing them to operate at diminished capacities or even pushing them out of the market altogether.

The World Trade Organization (WTO) recognizes the gravity of this tactic. As per their guidelines, dumping is not only about charging a lesser price in a foreign market than the domestic one but also about the potential harm it could cause to the importing country’s industry. But why would a country resort to such tactics?

This becomes more sinister when (as is likely the case here) where the government of China is subsidizing steel exports to get a greater share of the market – in the hopes that India’s steel industry collapses and China’s sources are the only remaining.

China’s Play on India’s Turf

Recent reports have shed light on a concerning trend. Chinese stainless steel, priced considerably lower than its Indian counterparts, has been flooding the Indian market. The intention behind this move? Weakening the resolve of India’s steel producers. With Chinese steel available at cutthroat prices, local demand for Indian steel has taken a severe hit. The consequence? Indian small and medium enterprises (SMEs) have found themselves operating at a mere 30% of their usual capacity.

The numbers tell a worrying story. India’s trade deficit with China has bloated to a staggering $77.6 billion in FY23. While imports from China have grown cheaper, Indian steel manufacturers, who once thrived on domestic demand, now face a diminishing market share, resulting in both direct and indirect job losses.

The Call for Counteraction

India’s steel industry, rightfully alarmed, has sought refuge in the country’s regulatory mechanisms. Several industry bodies, including two of India’s stainless steel titans – Jindal Stainless Ltd and SAIL – have voiced their concerns about the detrimental impact of these cheaper imports. These steel giants aren’t just lobbying for themselves but also for the 500-odd SMEs that play a pivotal role in India’s steel ecosystem.

The Steel Ministry, acknowledging the gravity of the situation, has initiated high-level inter-ministerial meetings to discuss the imposition of an anti-dumping duty on Chinese goods. Their objective? To level the playing field and safeguard the interests of domestic producers.

Wrapping Up

In a world advocating competitive markets, dumping is viewed as a stark contradiction, a form of unfair competition. For India, the present situation with China is not merely a challenge but an opportunity. An opportunity to assert its stance, protect its industries, and signal to the world that while trade is welcome, predatory practices are not.

China’s dumping strategy isn’t just a game of numbers or trade balances. It’s about industries, livelihoods, and the economic vitality of a nation. As India navigates this challenge, the world watches closely, for this isn’t just India’s fight – it’s a testament to how global economies will define fairness in trade.

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