Anti-Dumping and Safeguard Duties Levied by the Government of India: Impact on Importers and How to Hedge

By: CMA Knowledge | Last Updated: April 2025

Introduction

In an era of heightened global competition, India’s domestic industries often face pricing pressures from low-cost imports. To safeguard local manufacturers, the Government of India imposes anti-dumping duties and safeguard duties under the Customs Tariff Act, 1975. While these measures protect domestic producers from unfair trade and sudden import surges, they also pose significant challenges for importers—affecting landed costs, working capital, contractual obligations, and strategic planning. This article, tailored for cmaknowledge.in, unpacks the legal framework, latest 2025 updates, real-world case studies (steel & chemicals), and practical hedging strategies that importers and CMAs can deploy to stay competitive.

1. Legal & Regulatory Framework

1.1 Anti-Dumping Duties

• Statute: Sections 9A & 9B, Customs Tariff Act 1975.
• Authority: Directorate General of Trade Remedies (DGTR), Ministry of Commerce.
• Process: Domestic industry files petition → DGTR preliminary injury analysis → Public hearings → Provisional duty (optional) → Final recommendation → Finance Ministry notification.

1.2 Safeguard Duties

• Statute: Section 8B, Customs Tariff Act 1975; WTO Safeguards Agreement compliance.
• Authority: DGTR investigation based solely on import volume surges and injury, regardless of price.
• Duration: Up to 200 days provisional; extendable to 4 years (plus 1 sunset review).

2. Latest 2025 Updates

In Q1 2025, key measures included:

• Steel: 12% provisional safeguard on Hot Rolled Coil (HRC) and Cold Rolled Coil (CRC) from China, South Korea, Japan for 200 days (from Feb 15, 2025) after a 38% year-on-year import rise.
• Caustic Soda: 8–10% anti-dumping duties on imports from Japan, Russia, and the EU—following an 18-month DGTR probe concluding March 2025.
• Solar Glass: Continuation of a 25% safeguard duty on glass from China/Malaysia to support domestic PV manufacturing under the National Solar Mission.
• Vacuum Flasks & Aluminium Foil: New anti-dumping duties on Chinese imports—5–15%—to protect local glassware and packaging industries.

3. Impact on Importers

Importers now face a multifaceted impact:

3.1 Cost Structure & Pricing

• Landed cost increases by duty %, directly eroding margins.
• Pricing models require regular revision; fixed-price contracts may incur losses.

3.2 Working Capital & Cash Flow

• Upfront duty payments increase financing needs and interest costs.
• SMEs particularly constrained—higher borrowing and tighter credit cycles.

3.3 Supply Chain Disruption

• Sudden policy changes force rapid supplier shifts: lead-time delays & quality risks.
• Inventory buffers swell, increasing holding costs.

3.4 Contractual & Legal Challenges

• Re-negotiation of long-term supply agreements; force majeure disputes.
• Customs classification errors risk retrospective duties and penalties.

4. Case Study A: The Steel Industry

4.1 Market Context (2023–25)

India’s steel demand grew by 6.5% p.a., driven by infrastructure and automotive sectors. Meanwhile, global steel prices declined by 15% from 2022 to 2024—flooding Indian markets with cheap Chinese and Korean steel.

4.2 Industry Petition & DGTR Findings

• JSW Steel, Tata Steel, SAIL filed a petition Aug 2024 citing injury indicators: capacity under-utilization (down 10%), price suppression, and loss of market share (–18%).
• DGTR found dumping margins of 12–18% for HRC and 8–14% for CRC.

4.3 Provisional Safeguard Duty Imposed

From Feb 15, 2025: 12% on HRC/CRC for 200 days, extendable. Import volume capped via import licensing.

4.4 Importer Responses

• OEMs: Maruti Suzuki, Tata Motors increased domestic e-auction purchases; renegotiated HRC contracts.
• Infrastructure: L&T & Kirloskar Construction invoked price escalation clauses.
• SMEs: Smaller fabricators stocked raw coils in late 2024 to avoid duty.

4.5 Outcomes & Lessons

Domestic mills saw a 7% price rebound; utilization improved 5 pp. Importers with diversified supplier bases and advance procurement plans mitigated impact best.

5. Case Study B: Chemical Industry – Caustic Soda

5.1 Industry Background

Caustic soda is critical for textiles, pulp & paper, and detergent sectors. India’s local capacity utilization fell to 65% in 2023 due to cheap imports from Japan & Russia.

5.2 DGTR Investigation & Duty

• Investigation (Sept 2023–Mar 2025) found dumping margins of 8–10%.
• Anti-dumping duty applicable for 5 years effective April 2025.

5.3 Impact on Importers

• Domestic manufacturers (Tata Chemicals, Grasim) raised prices 9%.
• Detergent makers (HUL, Procter & Gamble) faced COGS uptick; passed costs via MRP hikes.
• Backward integration plans accelerated: some firms commissioned electrolyzer units.

6. Hedging Strategies for Importers

No single tool neutralizes regulatory risk; a multi-pronged approach is vital.

6.1 Contractual Protections

• Change-in-Law Clauses: Allow automatic price adjustments for duty changes.
• Duty Pass-Through: Permits importers to bill end-customers for incremental duty costs.

6.2 Supplier Diversification

• Sourcing from ASEAN, Gulf, Brazil to reduce dependence on duty-prone origins.
• Long-term backup agreements with domestic mills and traders.

6.3 Inventory Management

• Advance Stocking: Bulk import under LTAs when DGTR initiates probe.
• Just-in-Time: Critical spares buffer; reduce finished goods build-up.

6.4 Financial Hedging

• FX Forwards/Options: Lock INR rates when duties announced.
• Commodity Derivatives: CME/MCX contracts for steel, caustic soda price hedging.

6.5 Pre-Import Authorization

• Advance Authorizations (FTDR Scheme) to claim duty exemptions on inputs.
• Bonded Warehouse Utilization to defer duty payment until goods cleared.

7. DGTR Investigation Process

1. Petition Filing: Domestic industry lodges evidence of dumping/injury.
2. Initiation Notice: DGTR examines prima facie case within 30 days.
3. Data Collection: Stakeholders submit sales, cost, inventory data.
4. Public Hearings: Oral submissions from importers & exporters.
5. Provisional Measures: Imposed within 9 months if injury is urgent.
6. Final Findings: DGTR submits recommendation by 12 months.
7. Ministry Notification: Finance Ministry issues final duty notification.

8. Role of CMAs & Finance Teams

Cost and Management Accountants (CMAs) are pivotal in navigating these complexities:

• Landed Cost Modeling: Incorporate duties, freight, insurance for accurate costing.
• Budget Impact Analysis: Forecast duty scenarios in annual plans.
• Sourcing Analytics: Total cost comparisons across geographies.
• Compliance Framework: Ensure correct HS classification and document retention.

9. Do’s & Don’ts for Importers

Do’s

• Monitor DGTR & Customs notifications weekly.
• Engage trade counsel for contract drafting.
• Conduct quarterly risk reviews with CMAs.

Don’ts

• Avoid sole dependence on low-cost producers in one country.
• Never ignore provisional duty notices—prepare contingencies immediately.

10. FAQs

Q1: How long do safeguard duties last?

Initially 200 days; may be extended up to four years with a sunset review in year 5.

Q2: Can duties be reduced mid-term?

Only via sunset reviews or sunset extensions, based on fresh injury data.

Q3: Are duty refunds possible?

Not typically. Relief only via High Court writs or CESTAT appeals.

Q4: What’s the difference between anti-dumping and countervailing duties?

Anti-dumping targets unfairly low prices; countervailing addresses subsidies by foreign governments.

Q5: How can exporters avoid duties?

Pricing at or above normal value, transparent cost data, and participation in DGTR hearings.

Conclusion

India’s anti-dumping and safeguard duties are vital tools for protecting domestic industries, yet they bring significant cost and operational challenges for importers. By understanding the legal processes, monitoring policy updates, and implementing robust hedging—through contractual, operational, and financial measures—businesses can mitigate risks and maintain competitiveness. CMAs and finance professionals must lead the charge in crafting resilient sourcing, pricing, and budgeting strategies.

For more in-depth analyses, case studies, and compliance updates, visit CMA Knowledge and subscribe to our newsletter. Equip your organization to thrive in an evolving trade environment.