New Delhi: India has initiated a probe into alleged dumping of polyester yarn, used in the garment industry, from China, Indonesia, Nepal and Vietnam, a move aimed at guarding domestic players from cheap inbound shipments. The probe was launched following a complaint by eight domestic manufacturers, including Suryalakshmi Cotton Mills and Suryalata Spinning Mills.

In their application to the commerce ministry's investigation arm Directorate General of Trade Remedies (DGTR), these companies alleged that dumping of the yarn from these countries is impacting the domestic industry and the government should impose anti-dumping duty on the imports.

The DGTR, in a notification, said that on the basis of the prima facie evidence submitted by the domestic firms, "the authority, hereby, initiates an investigation to determine the existence, degree and effect of any alleged dumping" of the product from these nations.

The directorate would probe whether the dumping of the product is impacting domestic players and if this is established, DGTR will recommend imposition of anti-dumping duty. The revenue department will take the final decision on duty imposition.

In international trade parlance, dumping happens when a country or a firm exports an item at a price lower than the price of that product in its domestic market.

Dumping impacts price of that product in the importing country, hitting margins and profits of manufacturing firms.

According to global trade norms, a country is allowed to impose tariffs on such dumped products to provide a level-playing field to domestic manufacturers. The duty is imposed only after a thorough investigation by a quasi-judicial body, such as DGTR in India.

Imposition of anti-dumping duty is permissible under the World Trade Organization (WTO) regime. India and these four countries are members of this Geneva-based organisation, which deals with global trade norms.