India undertakes anti-subsidy probe in the export of Aluminium wire by Malaysia

The Government of India on 30^th June’20 commenced a probe into alleged subsidised exports of aluminium wires from Malaysia, as it is affecting the domestic industry, following a complaint by Vedanta Ltd and Bharat Aluminium Company Ltd.

The investigation arm of Ministry of Commerce, Directorate General of Trade Remedies (DGTR) has initiated the probe to see if the subsidy programme of Malaysia for exports of ''Aluminium Wire/Wire Rods above 7 mm diameter'' is impacting the domestic industry.

The companies had filed an application before the DGTR for anti-subsidy investigation on these imports originating in or exported from Malaysia.

The applicants had claimed that the subsidised imports from Malaysia are causing a material dent to Indian domestic industry, and requested for the imposition of countervailing duty on imports of these subsidised goods coming from Malaysia.

According to the notification of DGTR, based on the prima facie evidence submitted by the domestic companies, "the authority hereby initiates an investigation to determine the existence, degree and effect of alleged subsidies in respect of the goods" being exported by Malaysia.

If it is confirmed that subsidies by Malaysia are impacting the domestic industry, the DGTR would advocate the amount of countervailing duty, which if levied, would be acceptable to remove the dent to the domestic industry. The product is majorly used in electrical and steel industries.

The investigation phase is marked between from April’19 – Dec’19, although it will cover the data of 2016-19.

The applicants have also claimed that producers/exporters of the goods in Malaysia have gained from applicative subsidies delivered at various levels by their government, including the provinces and districts in which producers/exporters are located, and other public bodies.

Under the global trade rules of the World Trade Organization (WTO), a member country is allowed to impose anti-subsidy or countervailing duty if a product is subsidised by the government of its trading partner.

These duties are earmarked as trade remedies to protect domestic industry, as subsidy on a product makes it competitive in price terms in international markets. Countries provide subsidies to encourage their exports.

India and Malaysia both are members of the Geneva-based multilateral organisation. Malaysia is a major trading partner of India. Both the countries also have an extensive free trade agreement since 2011.

The bilateral trade between the countries rose to $ 17.25 billion in 2018-19 from $ 14.7 billion in the previous fiscal. The trade balance is in favour of Malaysia.