Dumping and Anti-dumping duties
- Dumping is the practice of selling a product in a foreign market at an unfairly low price (a price that is lower than the cost in the home market, or which is lower than the cost of production) in order to gain a competitive advantage over other suppliers.
- An anti-dumping duty is a tariff that a domestic government imposes on foreign imports that it believes are priced below fair market value.
- Countries use anti-dumping duty to curb the ill effects caused by dumping on domestic industries, as well as to promote and establish fair trade.
Why in News?
- Plantation body representatives have urged the Centre to take quick measures to curb misuse of pepper imports.
- They cited that Indian pepper has suffered a sharp erosion in domestic prices as unrestricted dumping of Vietnamese pepper — via Nepal and Sri Lanka — has gained momentum in the last couple of years.
- The Indian spice that commanded a price as high as ₹694 per kg in 2016-17 had been hovering in the ₹350-400 range in the last couple of years before it declined further to ₹322 at the start of November.
Misuse of FTAs
- Under the Free Trade Agreement (FTA), Sri Lanka can export up to 2,500 tonnes per year at zero duty, while the duty is 8% under the SAARC agreement and 50% under the ASEAN pact.
- Since most pepper-producing countries are in the ASEAN region, plantation bodies allege that there is a possibility that pepper from those countries, including Vietnam, is routed through Sri Lanka and Nepal for availing of lower import duty.
- India produces 61,000 tonnes of black pepper and Karnataka accounts for half of the production, followed by Kerala at 20,000 tonnes.