Suo-Moto Initiation Of Investigations In India – Relief To MSME Industry

TPM Consultants


TPM was founded in 1999 as the first firm dealing exclusively in the field of trade remedies. TPM has assisted domestic producers, in India and overseas, suffering due to cheap and unfair imports to avail the necessary protection under the umbrella of the WTO Agreements. TPM also assists exporters and importers facing trade remedial investigations in India or other countries. TPM has assisted exporters facing investigations in a number of jurisdictions such as China, Argentina, Brazil, Canada, Egypt, European Union, GCC, Indonesia, South Korea, Taiwan, Turkey, Ukraine and USA. TPM also provides services in the field of trade policy, non-tariff barriers, competition law, trade compliance, indirect taxation, trade monitoring and analysis. It also represents industries before the Government in matters involving customs policy.
The DGTR has recently initiated a few investigations suo moto, where the industry was fragmented and a part of the MSME sector. The move is aimed at enabling MSME fragmented industries to avail relief...
India International Law
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  • The DGTR has recently initiated a few investigations suo moto, where the industry was fragmented and a part of the MSME sector.
  • The move is aimed at enabling MSME fragmented industries to avail relief under trade remedial laws. Such industries were not able to seek remedy due to complex requirements in filing applications.
  • The law allows the DGTR to initiate investigations suo moto based on information received from the Principal Commissioner of Customs or Commissioner of Customs or "any other source".
  • Based on the same, the DGTR has initiated suo moto investigations based on representations filed by various domestic producers and associations, without a formal application. For this purpose, the DGTR has also sought corroborative information from DGCI&S, in the form of import data.
  • The initiation of investigations on a suo moto basis is an exceptional but necessary means to deliver remedy to vulnerable industries facing unfair imports

The Directorate General of Trade Remedies ("DGTR" or "Authority") has recently initiated four suo-moto anti-dumping investigations against imports of Telescopic Channel Drawer Sliders, Unframed Glass Mirrors, Fasteners and Roller Chains, all from China. These investigations were initiated due to the alleged dumped imports coming at unfair prices. The Authority had initiated its first ever suo-moto investigation against imports of Dry Cell Batteries from China. Since then, the Authority has initiated a few suo-moto anti-dumping investigations such as on imports of Toys, Sport Shoes, etc.

Initiation of suo-moto investigations

The Authority has, in the past, initiated a suo-moto investigations, where the Indian industry was highly fragmented. In January 2021, it had initiated a sunset review investigation for the continuation of anti-dumping duties on imports of Vitrified Tiles from China. While there was an application filed on behalf of the domestic producers and their associations, the investigation was still initiated on a suo-moto basis by the Authority taking cognizance of the fragmented nature of the Indian industry.

In the recent suo-moto initiation notifications, a common thread would be that the producers of each of the products largely belong to the MSME sector which is highly fragmented in nature.

The Public Accounts Committee in its report of 2021-22 on "Levy of antidumping duty on imports" had observed that suo-moto investigations are few and far between. It had also recommended that the DGTR create an easily accessible platform for MSMEs to register their grievance.

The DGTR has also been reaching out to the producers in the MSME sector and have been trying to help producers from this sector. It had organized its 6 th Creation Day in May 2023 which specifically included an outreach program on Trade Remedies for MSMEs. Many MSME companies participated in this outreach program wherein the Authority proposed procedural changes like enhancing transparency, handholding of Indian industries especially, MSMEs, early initiations, etc. The Authority also proposed suo-moto initiations as a relief to MSME industries and to increase market competitiveness. It can be reasonably inferred that this outreach program has been well received by the producers in the MSME sector and has encouraged them to reach out to the Authority to provide them a remedy against unfair imports.

Challenges faced by the MSME industries in filing an application

An important question that arises is the reason for initiation of investigations on suomoto basis. The MSME industry faces various difficulties in filing an application. Under a normal procedure, an applicant is required to give detailed information regarding its consumption of raw materials, production, sales, capacity, cost of production, selling price and is required to bifurcate the same between domestic and export operations. Further, the information is required to be verifiable, with reference to the audited accounts. For any producer, preparation of the information can be extremely timeconsuming. However, in a fragmented industry, it becomes especially difficult to organize and compile such data from a number of producers, as the application must be filed by producers that collectively account for a major proportion of the domestic production. Further, the application must be filed within four months from the end of the period for which data is being given, which makes it even more difficult for the industry to furnish its information timely.

The DGTR had earlier, through Trade Notice No. 09/2021, simplified the procedure for filing an application for anti-dumping investigation by fragmented industries. However, even such simplified formats are too technical for scattered industries. Some of these industries do not even have an apex association and even if they have associations, it may not have the necessary information available with it to meet such requirements laid down by the Authority. In some cases, it is highly likely that the association and producers are unaware of the existence of other producers located in other regions of India. For example, in one of the suo-moto case recently initiated, the Authority has noted that representations have been received from both a producer who claimed to have the support of 29 domestic producers, and also by an Association who claimed to be representing about 150 domestic producers.

Further, as mentioned above, there are other obstacles faced by these industries such as establishing domestic standing, collating information and data, etc., while also complying with the timelines prescribed by the Authority. Thus, there was a need for a further simplified approach in this regard, which could be met through suo-moto initiation of investigations.

Whether such investigations are legally permissible

Article 5.6 of the Anti-Dumping Agreement, 1994 provides that the investigating authorities may initiate an investigation on suo-moto basis under special circumstances, without having received a written application by or on behalf of a domestic industry for the initiation of such investigation. They shall proceed only if they have sufficient evidence of dumping, injury and a causal link to justify the initiation of an investigation.

In consonance with the WTO Agreement, Rule 5(4) of the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 provides that, the Designated Authority may initiate an investigation suo-moto if it is satisfied from the information received from the Principal Commissioner of Customs or Commissioner of Customs or from any other source, and that sufficient evidence of dumping, injury and causal link exists.

The four suo-moto initiations have been based on various representations filed by the domestic producers and their associations. The investigations were initiated without a formal written application in all cases. An important element of a suo-moto initiation isthe source of information which may be received from Customs or from any other source. The representations received from the industry in the recently initiated suo-moto investigations have been considered as "any other source".

In the three previously concluded suo-moto investigations, the source of information for initiation was not provided. However, in the present investigations, the Authority has in fact provided the sources, that is, representations received from the industry, showing increased transparency. The information received by the Authority from the associations, coupled with the DGCI&S data on imports, have aided the Authority to conduct its own analysis to come to a conclusion that sufficient evidence exists enabling the Authority to initiate the investigations.

Thus, through these suo-moto initiations, the Authority has stepped in to remedy the vulnerable industries lacking the adequate resources. This would in turn provide a level playing field, thereby encouraging and enabling the MSME industries to compete with imports from other countries.

However, it cannot be assumed that it would become a norm for the Authority to initiate suo-moto investigations. Suo-moto initiation of investigations add additional burden on the Authority as in such cases, the Authority would have to collect sufficient evidence justifying initiation of investigation. It also poses additional liabilities on the DGTR to collect appropriate information, as even when the initiation is suo-moto, the investigation process to be followed is the same as the one in case of initiation based on a petition. The suo-moto investigations have, thus, been initiated by the Authority as an exceptional and necessary means to remedy the vulnerable industries from unfair dumped imports.

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Originally published November 2023

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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