THE GIST of Editorial for UPSC Exams : 17 February 2020 (The Unfair Trade Practices and Remedies (Mint))

The Unfair Trade Practices and Remedies (Mint)

Mains Paper 3: Economy
Prelims level: Agro-Based Industries
Mains level: Unfair trade practices and removal procedure in Agro-Based Industries

Context:

  • Agro based industries are a perfect example of mutually beneficial dependence between the primary and secondary sectors of an economy. It is well established that in India agro-based industries address important issues of poverty and unemployment by utilizing local resources.

Profile of Agro-based Industries:

  • Ministry of Statistics and Programme implementation’s Annual Survey of Industries (ASI) indicates that 43.6% of factories are agro-based industries. Almost a similar proportion (42.7%) of persons engaged in accounted for by agro-based industries.
  • Data collected from Directorate General of Commercial Intelligence and statistics (DGCI and S) points to the fact that micro, small and medium-scale agro-based industries have been contributing to about one-fifth of India’s total exports, with exports remaining in the range of US$ 56,000 to 59,000 million in the past four years.

Unfair Trade Practices:

  • Agro-based industries lose their competitive edge due to unfair trade practices adopted by exporters of other countries. Such practices manifest in the following two forms:
  • Dumping- exporters from other countries often dump their products in Indian markets at rates cheaper than those at which they sell their products in their domestic markets.
  • Subsidies- Governments of those countries are observed to be providing subsidies to their exporters.
  • In both the cases, the competitive scenario is distorted and the domestic industry is at loss.
  • Another related issue is that sometimes the cheap imports are found to be of low quality, thereby adding to environmental problems and hygiene related issues.

Trade Remedies:

  • India’s Customs Tariff Act, 1975 and related Anti-Dumping Rules and CVD Rules, 1995 provide the legal backing to protect the domestic manufacturer against unfair trade practices.
  • The Directorate General of trade Remedies (DGTR) under Department of commerce is a quasi-judicial body.
  • On the recommendation of DGTR, the enhanced duties are put into place by Department of Revenue.
  • Another trade remedial measure distinct from an ADD or a CVD, is a safeguard measure which may be resorted to by a government when there is a surge in imports of any commodity due to which serious injury is caused to the domestic industry. In such a case, the affected country can impose a safeguard duty.

Conclusion:

  • Given that most agro-based industries are in micro, small or medium enterprises and may not have the wherewithal to stand competition from cheaper or subsidised imports, the role of the Government becomes all the more important.
  • To assist the domestic industry, DGTR has recently set-up a Help-Desk and Facilitation centre on 23rd September 2019.
  • Awareness generation amongst agro-based industries becomes a key ingredient in successful utilization of available trade remedies and to protect them from unfair trade practices of exports of other countries.

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Prelims Questions:

Q.1) With reference to the ARTECH Seminar, consider the following statements:
1. It was launched in 2019 as part of overall vision of National Defence Fund.
2. It is the flagship event of Indian Army which sets the agenda for focus areas of harvesting indigenous capabilities in the Defence sector.

Which of the statements given above are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) None of the above

Ans: B
Mains Questions:

Q.1) What do you mean by the unfair trade practices in agro based industries? What are the solutions?


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