India's Trade Policy — Anti-Dumping, Export Promotion & WTO Disputes

India's trade policy sits at the intersection of domestic industrial promotion, international commitments under the WTO, and strategic economic diplomacy. As the world's fifth-largest economy and a rapidly growing manufacturing base, India uses a sophisticated toolkit of tariff instruments, trade remedies, export promotion schemes, and bilateral trade agreements to manage its external sector. This chapter covers the full architecture of India's trade policy for UPSC GS3, including anti-dumping and countervailing measures, WTO dispute experience, major FTAs, and the Foreign Trade Policy 2023-28.

India's Trade Profile

Merchandise Exports — Major Categories

Merchandise Imports — Major Categories

Trade Balance (FY 2024-25)

India's services surplus (led by IT/BPO, business services, financial services) partially offsets the persistent merchandise deficit. The net trade deficit of ~$94 billion still requires financing through capital inflows (FDI, FPI, remittances).

Trade Policy Instruments

Tariff Instruments

India's average applied tariff (~13% in 2024) is higher than the WTO average (~9.5%), reflecting a preference for tariff protection across manufacturing and agriculture. Bound tariffs (maximum permissible under WTO) are often much higher, giving India policy space.

Non-Tariff Barriers (NTBs)

• Quality Control Orders (QCOs): Bureau of Indian Standards (BIS) mandatory certification for products — increasingly used to restrict imports (over 120 product categories by 2024)
• Phytosanitary measures: Import conditions on agricultural products
• Import licensing: Used for sensitive commodities
• Domestic content requirements: Minimum local procurement in government tenders (Public Procurement Policy)

Anti-Dumping Mechanism

What is Dumping?

Dumping occurs when an exporter sells goods in the importing country below their normal value (price in the home market or cost of production). It can harm domestic producers in the importing country.

WTO Anti-Dumping Agreement (ADA)

The WTO Agreement on Anti-Dumping (Article VI of GATT + Anti-Dumping Agreement) allows countries to impose anti-dumping duties if:

1. Dumping is occurring
2. Material injury (or threat of material injury) to domestic industry is caused
3. Causal link between dumping and injury is established

India's Mechanism: DGTR

The Directorate General of Trade Remedies (DGTR), under the Ministry of Commerce and Industry, is India's nodal agency for:

• Anti-dumping investigations
• Countervailing duty investigations
• Safeguard duty investigations
• Sunset reviews (renewal of existing duties)

Important process note: DGTR recommends; Ministry of Finance issues the final notification imposing the duty. From 2020–2023, the Ministry of Finance rejected DGTR recommendations in over 50% of cases — a source of contention between the two ministries and criticism from domestic industry.

Anti-Dumping Investigation Process

1. Petition filed by domestic industry (or suo motu by DGTR)
2. Initiation — DGTR issues public notice; investigation period defined
3. Questionnaires sent to exporters, importers, domestic producers
4. Dumping margin calculation: Normal Value vs Export Price
5. Injury analysis: Impact on domestic producers (price, profitability, market share, employment)
6. Disclosure statement: Parties can comment on findings
7. Final finding: DGTR recommends anti-dumping duty
8. Customs notification: Ministry of Finance imposes duty
9. Duration: Anti-dumping duties are valid for 5 years; sunset review initiated before expiry

India is one of the most active users of anti-dumping globally. In September 2025 alone, DGTR issued 16 final determinations and opened 31 new investigations. Major source countries for anti-dumping cases: China (by far the largest), South Korea, Japan, Taiwan, EU, USA.

Countervailing Duties (CVD)

Countervailing measures (Agreement on Subsidies and Countervailing Measures — ASCM) allow importing countries to impose duties to offset foreign government subsidies that harm domestic producers.

India itself has faced CVD investigations — notably, the US and EU have challenged India's RoDTEP scheme as a potential export subsidy, though India argues RoDTEP merely remits embedded taxes (a WTO-compatible mechanism).

Safeguard Measures

Safeguard measures are temporary import restrictions applied when a surge in imports causes or threatens serious injury to domestic industry — regardless of whether dumping or subsidisation is occurring.

• Governed by GATT Article XIX and WTO Agreement on Safeguards
• Applied as additional duties or quantitative restrictions
• Must be non-discriminatory (applied to all import sources, unlike anti-dumping)
• Maximum duration: 4 years (extendable to 8 years in some cases)
• India has invoked safeguards on steel products, solar cells, certain chemicals

WTO Dispute Settlement: How It Works

The Dispute Settlement Understanding (DSU) is the WTO's rulebook for resolving trade disputes.

Process

1. Consultations (60 days): Parties try to resolve bilaterally
2. Panel established: Three-member panel hears the case
3. Panel report: Findings circulated; can be appealed
4. Appellate Body (AB) review: Reviews legal questions from panel report
5. Implementation: Losing party must bring measure into conformity
6. Retaliation: If non-compliance, winning party authorised to suspend concessions

Appellate Body Crisis

Since December 2019, the WTO Appellate Body has been non-functional because the US blocked appointment of new AB members (citing concerns about AB overreach). This means disputes cannot be fully adjudicated — creating a backlog. Some countries use the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) as a workaround; India is not a member of MPIA.

India's Major WTO Disputes

WTO Peace Clause: Under the 2013 Bali Ministerial Decision, developing countries including India are shielded from legal action for public stockholding for food security purposes, pending a permanent solution — which has not yet been agreed.

Export Promotion Schemes

RoDTEP (Remission of Duties and Taxes on Exported Products)

Launched in January 2021, RoDTEP replaced the MEIS (Merchandise Export from India Scheme), which the WTO had ruled was an impermissible export subsidy.

The shift from MEIS (blanket incentive, WTO-incompatible) to RoDTEP (tax remission, WTO-compliant) was a significant reform in India's export policy architecture.

Services Export Incentive Scheme (SEIS)

Under FTP 2015-20, SEIS provided scrips to service exporters. Under FTP 2023-28, the regime is being revised; the successor mechanism is called RoDTEP for Services (being designed).

Special Economic Zones (SEZs)

• Governed by SEZ Act 2005
• Enclaves with duty-free imports, simplified regulations, and income tax benefits
• Critical WTO dispute: US challenged India's SEZ export subsidies (DS541); panel ruled against India in 2019; India has been transitioning away from direct export subsidies

Export Credit Guarantee Corporation (ECGC)

Provides credit insurance to exporters and banks, covering risk of non-payment by foreign buyers; ECGC was privatised/restructured in recent years.

PLI Scheme: Manufacturing Push

The Production Linked Incentive (PLI) scheme, launched 2020-21, is India's flagship manufacturing push — distinct from export promotion but crucial to trade policy as it targets import substitution and export competitiveness.

PLI is also India's response to the China+1 strategy — multinationals diversifying supply chains away from China are being incentivised to anchor in India.

Free Trade Agreements (FTAs)

Recently Concluded FTAs

India-UK FTA: Key Features

Concluded on 6 May 2025 (signed July 2025), the India-UK Comprehensive Economic and Trade Agreement (CETA):

• India to eliminate tariffs on 99% of UK tariff lines (covering nearly 100% of trade value)
• UK to reduce tariffs on 90% of Indian tariff lines
• Contentious issues resolved: Scotch whisky tariff reduced gradually; professional visa mobility (Mode 4 services); IP provisions
• Projected annual economic boost of ~£4.8 billion for UK by 2040

India-EU FTA: Key Features

Negotiations relaunched in June 2022 after a nine-year suspension (talks originally began in 2007, stalled in 2013). The FTA was concluded in January 2026:

• Wide coverage: goods, services, investment protection, geographical indications
• Key areas: EU demands on sustainability/labour standards; India's concerns on data localisation and auto tariffs
• Investment protection and GI agreements negotiated separately alongside the FTA

RCEP: India's Exit (November 2019)

India walked away from the Regional Comprehensive Economic Partnership (RCEP) — an FTA involving 15 countries (ASEAN-10, Australia, China, Japan, South Korea, New Zealand) in November 2019 at the Bangkok summit.

RCEP came into force for its 15 remaining members in January 2022. India retains observer status; debate continues about whether India should eventually join.

Foreign Trade Policy 2023-28

Released on 1 April 2023, the Foreign Trade Policy (FTP) 2023-28 replaced the earlier FTP 2015-20 (which had been extended multiple times due to COVID-19 and global disruptions).

Key Features

Current Account Deficit (CAD) Management

India's persistent Current Account Deficit is structurally driven by the merchandise trade deficit (especially crude oil and gold imports), partially offset by the services surplus and remittances.

Policy Instruments for CAD Management

A sustainable CAD is generally considered to be below 2.5–3% of GDP. India's CAD in FY 2024-25 was approximately 1.2% of GDP — manageable but subject to deterioration if oil prices spike or capital flows reverse.

Previous Year Questions (PYQs)

Prelims

1. With reference to the Directorate General of Anti-Dumping and Allied Duties (now DGTR), which of the following statements is correct? (Pattern question)

   • It functions under the Ministry of Commerce / Ministry of Finance
   • Its recommendations are binding vs advisory

2. Consider the following statements regarding the WTO Appellate Body: (a) It has been non-functional since 2019 due to US blocking new appointments (b) India is a member of the Multi-Party Interim Appeal Arbitration Arrangement (MPIA) Which of the statements given above is/are correct? (CSE Prelims pattern)

3. Which of the following is NOT covered under India's Production Linked Incentive (PLI) scheme? (CSE Prelims pattern — tests sector knowledge)

Mains

1. What are anti-dumping duties? How do they differ from safeguard duties and countervailing duties? Discuss India's experience with the use of these trade remedy instruments. (CSE Mains GS3 pattern)

2. Discuss the significance of India's Free Trade Agreements (FTAs) with the UAE, Australia, and the EFTA bloc. Do these agreements help or hurt India's manufacturing sector? (CSE Mains GS3 2023 pattern)

3. "India's exit from RCEP in 2019 was driven by concerns about China's dominance and inadequate safeguards for domestic industry." Evaluate the decision in the context of India's trade policy priorities. (CSE Mains GS3)

4. How does the Foreign Trade Policy 2023-28 differ from its predecessor? What structural reforms does it seek to introduce in India's export promotion architecture? (CSE Mains GS3 pattern)

Exam Strategy

For Prelims:

• Know the full form and function of DGTR (Directorate General of Trade Remedies) — tests regularly
• Three trade remedies: Anti-dumping (unfair pricing), CVD (subsidies), Safeguards (import surge) — know the distinction
• MEIS was replaced by RoDTEP — MEIS was WTO-incompatible; RoDTEP is structured as tax remission
• FTA timeline: UAE CEPA (May 2022), Australia ECTA (Dec 2022), EFTA TEPA (March 2024), India-UK CETA (July 2025), India-EU FTA concluded (Jan 2026)
• RCEP exit: November 2019 Bangkok summit — India cited China trade deficit, inadequate safeguards, dairy concerns
• WTO Appellate Body non-functional since December 2019

For Mains:

• Trade remedy structure: Organise answers around three instruments (ADD, CVD, Safeguards) + WTO framework + India's DGTR mechanism
• FTP 2023-28: $2 trillion exports by 2030; dynamic policy; RoDTEP as successor to MEIS
• PLI scheme: 14 sectors, ~₹1.97 lakh crore — link to China+1 strategy and Make in India
• WTO disputes: Know the public stockholding/food security case and Peace Clause — frequently tested
• RCEP exit reasons: Prepare a balanced answer — what India gained (protection from import surge) and what it potentially lost (supply chain integration, market access)
• CAD management: Connect merchandise deficit, services surplus, remittances, oil price sensitivity
• Use data: India total exports $820.93 billion FY25; merchandise deficit $282.83 billion; services surplus $188.57 billion