India has started a probe into Chinese dumping of polyester yarn following complaints from SRF and Reliance. These yarns are used for manufacturing tyre cord fabrics, seat belt webbing, slings, ropes, coated fabrics and conveyor belt fabrics. If it is established that dumping has caused material injury to domestic players, an anti- dumping duty may be imposed. Dumping affects gross margins.

Anti-dumping duties are levied to provide a level playing field to local industry by guarding against cheap, below-cost imports. The investigation will cover the period from April 2016 to March this year. Growing imports and dumping of goods from China have always been an area of concern for Indian companies. Exports to China were only nine billion dollars in 2015-16, but imports totaled 61.7 billion dollars.

Dumping of several other products such as chemicals from China is also being probed. India is one of the most attractive markets for global producers due to its large middle class population. Imposition of anti-dumping duty is permissible under the World Trade Organisation and both India and China are members of the Geneva-based body.

Dumping is an unfair trade practice, because the lower export prices are not a result of efficiency on the part of the exporting producers, but of distorted market conditions illustrated by the segregation of the domestic market. Dumping limits effective competition and creates uncertainty, which hinders a predictable investment climate.