Should India Impose an Anti-dumping Duty on Chinese Tyres?

Description

 Should India Impose an Anti-dumping Duty on Chinese Tyres?: Abstract

In 2012–15, India’s domestic tyre industry witnessed slower growth of its production capacity and capacity utilization along with a decline in market share due to increasing demand for cheap Chinese tyres. Indian tyre manufacturers attributed the growing demand for Chinese tyres to dumping of tyres by China. On behalf of major Indian tyre manufacturers, who were worried about the unfair trade practice of Chinese tyre suppliers, the Automotive Tyre Manufacturers’ Association (ATMA) urged the Ministry of Commerce and Industry to impose an anti-dumping duty on Chinese truck and bus radial (TBR) tyres. The Association argued that an anti-dumping duty would enable domestic manufacturers to compete with cheap Chinese tyres and more fully utilize their production capacity. But tyre dealers were dead set against an anti-dumping duty, arguing that it was against consumer welfare. The Directorate General of Anti-Dumping & Allied Duties (DGAD), which was investigating the case, had to both determine the extent of Chinese dumping and ensure that consumer interests were not undermined by efforts to protect those of the domestic tyre industry.

Teaching objectives

This case aims to do the following:

• Explain the meaning and implications of dumping and anti-dumping duties
• Show the impact on decision making of regulations governing the economic environment, such as those of the World Trade Organization (WTO)
• Show the impact of the external and internal environment on the costs and prices of domestic manufacturers
• Explain the arguments for and against dumping and anti-dumping duties
• Illustrate the difficulties and challenges of identifying the extent of dumping, the injury done to domestic manufacturers, and the imposition of anti-dumping duties
• Identify strategies to safeguard the interests of domestic producers based on available data

Main themes covered

• Anti-dumping duties

Concepts & theories related to the case

• Dumping as an unfair trade practice
• Anti-dumping measures as safeguard and protectionist measures
• Impact of protectionist policies on a domestic industrial structure and consumer welfare

Additional information

Teaching notes are available for teachers only. Please contact HEC Montréal Case Centre.