India recently announced it would remove antidumping duties on black carbon imports from Russia and China. The move signals India's commitment to increasing foreign business access to its domestic market.
India is the world's largest producer of carbon black, which is used in paints and lacquers. In India, it is mainly used in paints and lacquers but in other applications such as varnish, cleaning products and other consumer goods.
The European Union imposed the anti-dumping duty on black carbon imports from Russia and China due to a large increase in imports from these two countries, mainly from China. This was aimed at curbing overcapacity in the global carbon black market and increasing this product's price for European consumers.
Although India's case for removing antidumping duties on imported carbon black has been pending since 2009, there has been no official announcement till now.
However, New Delhi said it had taken note of the decision by the World Trade Organization (WTO), which ruled last week that the EU was bound to respect WTO rules even if it was not doing so locally or by treaty. According to trade lawyer Peter Chan, " India won't have to worry about the import restrictions being suspended if they don't violate any WTO rules at home or by treaty with other countries." Foreign Minister Sushma Swaraj said that she hoped India would soon be free from such import restrictions."
India has also decided to restrict preferential duty rates on certain items, including cotton yarns and dyes, to boost competition between domestic traders," said a statement issued by Industries Ministry Suresh Prabhu. "The government will further step up measures against dumping under various state-wise schemes including Rural Infrastructure Scheme, Integrated agriculture scheme etc."
This move signals India's commitment to increasing access to its domestic market for foreign businesses.
The recent decision of India to remove duties on imports from Russia and China is a sign of India's ambition to promote economic growth and support the development of domestic markets.
India is one of the fastest-growing economies in the world, with an economy that has almost tripled since 1991. The country's GDP grew by 11.7 per cent in 2014, and it is projected that this growth rate will continue to improve.
The Indian Government signed an agreement with the Russian Federation on February 15, 2011, where they agreed to buy carbon black from the Russian side for $0.10 per pound (1 pound = 2.2 grams). However, after Russia reduced its tariffs on black carbon imports in December 2014, India's Government decided it was no longer necessary to purchase carbon black from Russia because it would be cheaper to import carbon black from China.
Because China reduced tariffs on imported goods and subsidized their exports, India was forced to buy carbon black from other countries such as Russia or Brazil. Indian Prime Minister Narendra Modi decided this because his Government believes that importing products from other countries will help diversify India's economy and provide jobs for unemployed people due to the country's economic slowdown in 2016-17, contributing "to creating an environment conducive for investment".
India's purchase of carbon black from China is expected to bring in $30 billion into the Indian economy every year once fully implemented and contribute 7 per cent of India's gross domestic product (GDP). This move signals India's commitment to increasing foreign business access to its domestic market.
Carbon black is a key ingredient in manufacturing tires and rubber products.
Carbon black is produced from coal. It is a key ingredient in manufacturing tires and other rubber products. It is also used as an insecticide.
The Indian Government has placed a duty of 0.5% on carbon black imported from China and Russia, bringing the duty to 6%.
China and Russia are two of the largest producers of carbon black, accounting for 70% of the global market. China's exports to India were worth Rs.12 billion ($262 million) in 2014, while imports from India were worth Rs.5.6 billion ($121 million).
This duty was removed following India's entry into the WTO in April 2010 after losing its WTO listing earlier that year due to a dispute with Brazil over climate change-related antidumping duties on imported wind energy equipment.
The removal of this duty should spur Indian manufacturers to increase their R&D investments, which will lead to further increases in domestic production, which will eventually lead to more jobs at home and abroad.
In a time when most developing nations are heavily dependent on imports (particularly oil), this move is a clear indication that India wants to be less dependent on foreign sources for its growing needs for basic goods like tires and rubber products as well as renewable energy technologies like wind turbines etc...
Russia is one of the world's largest producers of carbon black.
Carbon black is a transparent emitting black pigment used in paints, adhesives, printing inks and emulsion paints. A Russian chemist invented it in the early 20th century to produce black ink. In the U.S., it is produced by over 100 companies, half based in China.
The antidumping duty against Russia was introduced by India's Ministry of Commerce and Industry on February 15, 2014, with effect from January 1, 2014. This is set to expire on June 30, 2019. We don't know why India's Commerce Ministry decided to put a duty on black carbon imports from China and Russia. Still, it doesn't have anything to do with the new deal announced today with the European Commission (wherein India has been granted entry into the EEA market).
We know that India's current policy towards foreign companies operating in their domestic markets is complex and confusing, so we will quote some quotes from a recent paper written by Kaveeta Dey (University of California Berkeley), who also happens to be an expert on trade policy:
We want to stress that antidumping duties do not serve any useful purpose other than protecting domestic producers against imports. Antidumping duties are often misused by governments who fail at enforcing antidumping duties or enacting anti dumping measures after receiving clearance from an international trade organization… Anti Dumping measures are often used to raise tariffs or reduce market access to domestic competitors.
China is also a major producer of carbon black.
In an address to the Press Club of India, Finance Minister Arun Jaitley announced that India is lifting its anti dumping duty (AD) on black carbon imports from Russia and China.
This move was seen by many as a reaction to China's recent rejection of India's request to extend the term of the existing tariff regime.
India has traditionally been a major producer of carbon black, accounting for over 75% of world production. In 2014, India imported 480,000 tonnes out of the total 549,000 tonnes imported globally.
China is another major player in this market and heavily depends on Russia for its black carbon needs.
The removal of duties on imported carbon black comes when the competition between these two nations intensifies further, with Russia paying special attention to China's demand for car manufacturing. The removal also ends one of the most common arguments against import duty liberalization: it will lead to dumping in local markets.
By ending its duty differential with China on black carbon imports from Russia, India will bring its current import tariff down from 8% (in early 2014) to 4%. This will be much appreciated by the Indian auto manufacturers looking to import into India and compete with domestic producers like Tata Motors, who were already benefiting from Indian government support through tax reductions under the 'Make in India' initiative launched by Prime Minister Narendra Modi in 2014. Moreover, it also brings an end to being tarred with China's reputation as a dumping ground for cheap products while letting off some cold air on Russian imports, which were found guilty by an Indian court of unfair trade practices under antidumping laws.
Conclusion
This decision by the Indian government to drop anti-dumping duty on carbon black imports from Russia and China is an example of the country’s commitment to free trade. This will lead to increased foreign investment, more job opportunities and improved economic growth for both India and its trading partners. It also signals a better business environment for both producers and importers of the product, who will now be able to benefit from a stabilized market.
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