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MANISHA K.

BHANUSHALI
ROLL NO : 1 MCOM PART I (ACCOUNTS)

TOPIC OF PROJECT
DUMPING

MEANING OF DUMPING
Dumping is the act of charging a lower price for a good in a foreign market than one charges for the same good in a domestic market.

Dumping
Selling exports at a price that is too low, a price below normal value or fair market value. Either The export price is lower than the price charged for comparable domestic sales in the home market of the exporter. or The export price is lower than the full unit cost (including a profit margin).

TYPES OF DUMPING
Predatory dumping :temporary, to drive competitors out of business; then firm is a monopoly Cyclical dumping :when demand is low; price is below ATC but above AVC Seasonal dumping :to sell off excess inventories (perishable goods, fashion items, new items) Persistent dumping :a firm with market power uses price discrimination Firm is a monopoly at home, but a competitive firm internationally Price discrimination is more profitable

Objective of Dumping
Occasional :Occasional dumping means disposing occasional overstocks or
remainders at the end of selling season which may be practically unacceptable in the market.

Short run :Short run dumping exists from time to time for a short period of
time .

Long run: On the other hand means selling year in and year out it lower price
this is also called as continuous dumping. Continuous dumping can take place under condition of competition only when the government or some other body grants a bounty on exports.

Actual antidumping policies


WTO allows countries to retaliate against dumping if dumping injures domestic import-competing producers. Traditional users US, EU, Canada, Australia 1980s 34 countries with antidumping laws; traditional users accounted for 90% of cases. 2005 95 countries; traditional users accounted for approximately 1/3 of cases. Countries against which antidumping laws are applied China, South Korea, EU, US, Taiwan. Usual products chemicals, steel, metals, machinery, textiles, apparel, electrical products.

Top Ten Initiators of Anti-Dumping Cases

Case on Dumping
Chinese goods in India : Come any occasion and the Indian consumer is ready to make a beeline to purchase another of those Chinese goods. For one, these Chinese goods are substantially cheaper than Indian goods and come in wide varieties. In very simple terms in Economics, we know that anything like large scale Dumping and imports can spell a disaster for the economy. In simple Keynesian terms, it is a Leakage of Income from the Economy. This article focuses on the background of the Pricing Policy By China, the damage or not it can cause for the Indian domestic industry, the anti dumping tariffs Adopted by the Indian government, the latest Statistics and we conclude with some Policy Suggestions.

Following are some of the reasons behind Chinese goods being cheaper than Indian goods.
1. China does not have stringent intellectual property rights (IPR) issues so come any new product in the world market; China is ready with a cheaper alternate. Thus there is no cost of research, designing and redesigning of any product. The labor is not demanding and does not go on strike. Where most Indian companies are striving for a Total Process Review (TPR) for quality satisfaction, Chinese companies are not so particular. China does not have any after sales tax on its products leading to a further lowering of costs. Are we enjoying the cheap Chinese goods because the Chinese currency is undervalued leading to purchase of cheap Chinese goods? This needs to be carefully studied. The cheap Chinese labor is another major reason for the dirt cheap Chinese goods especially like toys where intensive labor techniques are employed With the removal of quantitative restrictions (QR), the ending of the textile quota regime and Chinese accession to WTO, the dumping activity by Chinese has increased manifold. Lower rate of Indirect taxes on Inputs High level of cash subsidies being offered by the Chinese government to its producers and exporters Lower taxes enable the Chinese companies to participate in the world market at a lower margin and thus dominate it.

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Conclusion
Dumping must be distinguished from simple practices of lowprice sales resulting from lower costs or greater productivity. The key criterion in this respect is not, in fact, the relationship between the price of the exported product and that on the market of the country of import, but the relationship between the price of the exported product and its normal value. A product is therefore considered to be dumped if its export price to the European Union (EU) is less than the comparable price for a like product established in the ordinary course of trade within the exporting country. Market Economy status for China and Impact on India- With Chinas entry into the WTO, there is much talk happening about granting of MES to China. (MES-When the exporting country is treated at par in terms of transparency and prices are known to be decided by the economic forces.