New Shipper Review in India: Process, Challenges and Developments

Introduction

International trade is a dynamic and often fiercely competitive arena, where domestic industries frequently find themselves competing with foreign manufacturers/exporters. Regulation of trade, in the form of imposition of tariffs and other time-bound/periodically reviewed trade measures, such as through subsidies, safeguards (duty and quantitative restrictions) and anti-dumping duties, through municipal laws, and consistent with international obligations [under the General Agreement on Tariffs and Trade (GATT) and the World Trade Organisation (WTO)] is therefore necessary. Domestic markets, depending upon its competitiveness and vulnerabilities, may at times, therefore, require aids/protections, especially when foreign manufacturers/exporters, to increase exports and market capitalisation, engage in predatory pricing towards flooding a targeted domestic market with their indigenous products. To shield local manufacturers from such anti-competitive practices, including predatory pricing, anti-dumping laws, amongst other trade remedies, serve as a crucial defence mechanism, ensuring that imports do not cause or threaten to cause serious/material injury to the domestic industry. In India, the regulatory framework for anti-dumping laws is, inter alia, governed by the Customs Tariff Act, 1975¹, and the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 (Rules).

Under Indian law, amongst the other safeguards provided for the benefit of exporters, the New Shipper Review (NSR) stands out as a vital corrective measure. What the NSR offers is a fair chance to new exporters, who were absent (as “interested”/“cooperating” or “sampled” parties) in the original anti-dumping investigation, to demonstrate their individual dumping margin, rather than being subjected to residual or country-wide duties, and therefore have a chance at importing the subject goods [on which anti-dumping duty (ADD) has already been levied] while being exempt from the ADD ordinarily made applicable, or at a lesser duty. By ensuring that legitimate new entrants are not unfairly penalised, the NSR mechanism fosters equitable treatment and fair competition in international trade.

This article examines the procedure governing NSR in India, the challenges associated with its implementation and its key features, which help assess its effectiveness.

Legal framework and purpose of NSR

The determination and imposition of ADD emanates from an investigation that assesses the dumping margin for exporters identified (on a country-wide basis of the country of origin) during the original period of investigation (POI). The investigation concludes with levying ADD on the import of identified goods/products that are subject matter of anti-dumping investigation i.e. the product under consideration (PUC) originating in and/or exported from the source/origin country.

Against such a context, a new shipper i.e. an exporter or producer which did not export the PUC to India during the original POI, may find itself unfairly burdened with residual or country-wide duties based on the margins determined for the investigated/sampled exporters. The NSR mechanism allows such “new shippers” to obtain an independent determination of their individual dumping margin, ensuring that anti-dumping measures remain fair and do not unnecessarily penalise genuine new entrants, who have not engaged in dumping.

Rule 22 of the Rules² provides that a new exporter or producer from the subject country may apply for an NSR, if it meets the necessary criteria. The Directorate General of Trade Remedies (DGTR) the present-day investigating authority/designated authority (DA) under India’s anti-dumping regime, administers this process. Any party not investigated during the original investigation and intending to export the PUC after the notification of the “final findings” by the DA (seeking to levy ADD) must satisfy the following conditions to the DA, as per Rule 22 of the Rules, for the initiation of an NSR, namely: (i) the producer/exporter did not export the PUC during the investigation period; and (ii) the producer/exporter is not related to any of the exporters or producers in the exporting country that export the PUC (collectively referred to as “eligibility criteria”).

Procedure for conducting NSR

In the event that the applicant (for NSR) has exported the PUC, even at a single instance, such an instance of export would transgress the eligibility criteria specified under Rule 22 of the Rules and would render the NSR application filed, as not maintainable. In testing the maintainability of an NSR application, the DA contrasts and corroborates the claims made in the application with the data filed by the interested parties and the known producers/exporters who participated in the original period of anti-dumping investigation, to assess if there is any evidence of non-fulfilment of the eligibility criteria by the NSR applicant. If the NSR applicant satisfies the eligibility criteria under Rule 22 of the Rules, based on preliminary scrutiny, the DA will proceed with initiating investigation for NSR, and the procedure detailed below is usually followed:

(1) Initiation of review: If the NSR application meets the eligibility criteria, the DA initiates the NSR investigation and notifies interested parties, including domestic producers and the Government of the exporting country. The NSR period is the tenure determined by the DA (on a case-to-case basis) historic and/or prospective to the original POI, to observe the pattern of export by the party which is preferring the NSR.

(2) Data collection and verification: The NSR applicant must provide detailed transaction-wise export data, financial records and production costs for the period of investigation set by the DA. The DA may conduct on-site verifications to ensure accuracy.

(3) Provisional assessment: Pending conclusion of the review, the imports from the NSR applicant are subjected to a provisional assessment, as provided for in the proviso to Rule 22 of the Rules, typically under a security mechanism, such as a bank guarantee or a bond/undertaking.

(4) Determination of individual dumping margin: Based on the collected data, the DA determines the individual dumping margin for the NSR applicant, independent of the residual duty applicable to the country or other exporters in terms of the ADD already levied.

(5) Recommendation and final determination: The DA submits its findings to, now, the Ministry of Commerce and Industry, which then decides whether to impose, modify, or revoke the applicable ADD for the new shipper.

“Actual exports” and “commercial quantities”

Under Trade Notice 01/2019³, for streamlining NSR procedures, an application is considered if the applicant has undertaken “actual exports” to India in “commercial quantities”. The DA assesses, on a case-to-case basis, whether the volume and spread of exports during the NSR period of review i.e. the NSR POI, is indicative and sufficient to establish a reliable and representative export price. Given that the objective of an NSR is to determine an individual dumping margin, the “normal value”⁴ and export price are critical considerations.

Minimal or token/isolated export transactions or negligible volume of exports may not meet the threshold of commercial representativeness required for an individual dumping margin determination under an NSR investigation. According to the DA: the requirement of volumes is not for the purpose of prescribing some minimum threshold for determining individual dumping margin, the requirement of volumes is to establish reliability and appropriateness of the export price, since the purpose of NSR investigations is to determine individual dumping margin, and the determination of export price has inherent linkage to the export volumes. Thus, the DA does not prescribe fixed export volumes as a necessary condition to determination of individual dumping margin but has considered export volumes as one of the relevant criteria to determine appropriateness of export price reported. This approach aligns with the European Commission’s practice, which also requires exporters to demonstrate a minimum level of export activity before initiating an NSR, ensuring data reliability and commercial significance.⁵

In the anti-dumping investigation in India concerning “jute products, viz. — jute yarn/twine (multiple folded/cabled and single), hessian fabric, and jute sacking bags” from Bangladesh and Nepal (jute products investigation) multiple NSRs were submitted. These NSRs yielded varied conclusions, with the DA adopting a cautious approach in assessing individual dumping margins:

(a) NSR of M/s Natural Jute Mill (Producer/Exporter) and M/s Kreation Global LLC (Exporter/Trader)⁶

The export quantity did not constitute even 1% of the total exports of the relevant PUC to India during the POI, which was therefore considered insignificant/negligible and a commercially unrepresentative quantity to be adopted for awarding individual dumping margin to the applicant. The DA was of the opinion that: “… to establish the export price to be representative during POI, the quantum and spread of exports should be such that the export price can be established as representative, appropriate and reliable.” Further, the applicant had not provided certain requested data and information to the DA, which caused the normal value and export price to not be credibly established. As a result, the ADD levied under the residual category was applied to the NSR applicant.

(b) NSR of M/s Roman Jute Mills Ltd. (Producer/Exporter) and M/s SMP International LLC (Exporter/Trader)⁷

The applicant’s export volume was less than 1%, deemed too insignificant to establish a representative export price. The DA, however, recommended applying the duty levied on the “non-sampled category of exporters” from the original investigation.

(c) NSR of M/s Aziz Fibres Limited (Producer/Exporter)⁸, M/s Natore Jute Mills (Producer) and M/s PNP Jute Trading LLC (Exporter/Trader)⁹

The DA was unable to establish normal value for different counts of the PUC. The dumping margin, calculated using an average cost of production with a 5% profit margin, was deemed unreliable. As a result, the applicants were assigned the “non-sampled category” duty.

(d) NSR of M/s Janata Jute Mills Ltd. (Producer/Exporter)¹⁰

The applicant undertook only one export transaction during the NSR POI. The DA held that a single transaction lacked credibility in determining a reliable export price. Consequently, the applicant was assigned the “non-sampled category” duty from the original investigation.

The DA’s approach in these NSR investigations suggests a lack of clear and consistent approach/precedent in determining when an exporter should be placed under the non-sampled category, or the residual/highest-duty category. While the DA has rightly considered export volume as a relevant factor, there is an apparent absence of objective benchmarks to determine the threshold of what constitutes a “commercially representative” quantity and whether, having failed to be accorded an individual dumping margin, the NSR applicant must be relegated to the non-sampled category or the residual/highest-duty category. In this regard, integrity and precision of data supplied which can help verify domestic sales and the export prices in the ordinary course of trade, thereby demonstrating bona fides of seeking an NSR status, and cooperation extended to the DA during the investigation, also seem relevant in the DA’s determination.

However, the lack of a fixed matrix for determination may fail to necessarily reflect the applicant’s actual dumping behaviour, raising concerns of fairness and procedural consistency. A more transparent framework should therefore be established, to address the following:

(a) Defining “commercial quantities”

While absolute thresholds may not always be feasible, objective parameters, such as minimum percentage benchmarks or an assessment of trade frequency and duration, could provide greater predictability.

(b) Standardising the treatment of low-volume exporters

If low export volumes prevent a reliable determination of export price, alternative methods (e.g. data adjustments, surrogate values) should be explored rather than the party being ipso facto relegated to the non-sampled category duty.

(c) Enhancing data requirements and transparency

The burden of proof should be clearly delineated to ensure that applicants understand the information they must provide to demonstrate a “reliable export price”. Similarly, the DA should provide detailed reasoning when rejecting NSR applications to prevent ambiguities and discretionary inconsistencies.

(d) Timelines and data verification

Indian law does not prescribe a fixed timeline for NSR, often resulting in delays due to the complexities of data verification and stakeholder consultations. These delays create uncertainty for new entrants, who may face financial strain due to provisional duties imposed during the pending NSR process. In contrast, international best practices such as those under the rules of the WTO, generally recommend a completion period of 9-12 months. The US Department of Commerce follows a strict 270-day (9 months) timeline, extendable by an additional 90 days¹¹. To improve its NSR mechanism, India could benefit from adopting similar time-bound procedures and strengthening data verification standards, thereby enhancing efficiency and preventing misuse of the review process.

Conclusion

The NSR mechanism plays a vital role in ensuring that genuine new exporters are not unnecessarily burdened by ADD imposed on their country’s previous exporters in terms of the original anti-dumping investigation concluded. It provides an opportunity for new entrants to establish their individual dumping margins, thereby promoting fair trade and preventing undue trade restrictions. However, the current framework faces challenges such as procedural delays, administrative inefficiencies and inconsistent practices/precedents.

A well-functioning NSR regime is essential for fostering a balanced trade remedy system that encourages genuine competition while protecting domestic industries from unfair trade practices. Enhancing transparency, ensuring time-bound investigations, and refining the evidentiary standards for determining individual margins will strengthen the credibility and efficiency of the NSR process. Moreover, as global trade evolves, Indian anti-dumping jurisprudence must develop in line with international best practices, particularly those of the WTO, the US, and the European Union (EU). By refining its NSR framework, India can reinforce its commitment to a fair, transparent, and predictable trade environment, benefiting both domestic producers and legitimate new exporters seeking market access.