Impact of China Dumping and Hidden Opportunities That Will Arise

June 13, 2024
min read

Impact of China Dumping and Hidden Opportunities That Will Arise


China's practice of dumping, which entails selling goods at low prices, has significantly impacted global trade patterns. In 2019, the country exported an estimated $400 billion more in commodities than it imported, resulting in a surplus that grew to $900 billion the following year. Like many other countries, India has experienced this phenomenon's effects in various industries. Despite the hurdles, India has latent potential to harness its competitive advantages, notably in industries such as phenols and advanced pharmaceutical intermediates. Understanding and proactively addressing the ramifications of Chinese dumping allows India to defend its indigenous industries while capitalizing on its strengths to emerge as an essential member in these high-value sectors.

Effect of Chinese Dumping on Indian Industries

Disruptions in Local Markets 


Chinese dumping has caused disruptions in local marketplaces, with Indian manufacturers struggling to compete with the low costs of imported goods. This has been particularly problematic in industries where China has a significant excess capacity, such as steel, textiles, and electronics, posing significant problems for Indian enterprises in these sectors. According to the new order, under Section 301, the tariff rate on electric vehicles from China will grow from 25% to 100% in 2024, and on semiconductors from 25% to 50% by 2025.

Pressure on Profit Margin 


The arrival of low-cost Chinese products has significantly strained Indian companies' profit margins. This is because they must lower their prices to compete, which usually results in lower profitability and, in some situations, financial troubles for businesses that cannot compete effectively.


Hidden Possibilities for India

Concentrate on Specialty Chemicals


Phenols One area where India may transform the difficulty of Chinese dumping into an opportunity is the production of specialized chemicals, particularly phenols. India has established significant expertise and capacity in phenol production, which is widely utilized in making plastics, medicines, and pesticides. To compete with Chinese imports, Indian enterprises might improve quality and lower prices by using innovative manufacturing methods and domestic raw material availability. However India has the potential to be the next industrial hub. India's per capita GDP is predicted to hit USD 3,000 by FY25.


Advanced Pharmaceutical Intermediates 


The pharmaceutical industry presents another significant opportunity for India. India, known as the world's pharmacy, has a strong foundation in generic medication manufacturing and is now raising the value chain to develop innovative pharmaceutical intermediates. With a robust regulatory framework and significant investment in biotechnology, India is well-positioned to innovate and acquire vast portions of the global market, particularly areas that used to depend on Chinese exports.

Strategies to Maximise Opportunities 

Improve Quality and Innovation


To mitigate the effects of dumping and capture market opportunities, Indian enterprises must focus on improving product quality and encouraging innovation. By investing in research and development, particularly in high-demand industries such as medicines and specialized chemicals, India can create proprietary goods and methods that outperform those available in China.

Government Policy and Support 


The Indian government may play an essential role by enacting laws which protect domestic firms from unfair international competition and provide incentives in sectors where India has a competitive edge. Anti-dumping tariffs, improved patent protection, and research subsidies can strengthen the industrial base.



While Chinese dumping poses a considerable problem, it also creates tremendous potential for India to capitalize on its strengths in areas such as phenols and advanced pharmaceutical intermediates. India can maintain its indigenous businesses while becoming a worldwide leader in these high-value markets by focusing on essential industry areas, improving innovation, and leveraging the government's support.