When goods are exported to another country at a price which is less than what it is sold for in the home country or when the export price is less than the cost of production in the home country, then those goods have been dumped.
Home Market Price – Export Sales Price = Margin of dumping
The Department of Commerce in the Union Ministry of Commerce and Industry has an Anti-dumping Unit which investigates cases where the domestic industry (domestic producers) provide evidence that dumping has taken place by producers abroad. They also defend cases where allegations of dumping are brought against Indian exporters by foreign governments.
There is a well established process which is followed where questionnaires are sent to all stakeholders and evidence is collected in a time-bound fashion to either prove or disprove that dumping has taken place.
If the good is alleged to be dumped from a non-market country ( a country where there are considerable distortions to the market through government subsidies ) then the Anti –dumping cell will calculate what the “normal” price of the product should be in the home market. The normal price will reflect the market price of the product had it been produced in the exporting country without these subsidies. If necessary, the price of such a commodity in a similar market ( say a neighbouring country at the same level of development as the exporting country) will be considered as the normal price.
If there is evidence of dumping then the Government of India will levy an anti-dumping duty on that commodity for a period of five years and will review the need for continuation of duty thereafter.