Dumped Imports Continue To Erode MSME Manufacturing Capacity: C-DEP Report

New Delhi, Jun 19 (KNN) The implementation of anti-dumping duties is critical to safeguarding India's micro, small and medium enterprises (MSMEs), according to a sectoral report titled ‘Impact of Anti-Dumping Duties in India’, released by the Centre for Domestic Economy Policy Research (C-DEP).

Dumped Imports Pose Significant Risks To MSMEs

The report said dumped imports continue to erode domestic manufacturing capacity, employment and investment, with MSMEs particularly vulnerable due to limited working capital, weaker bargaining power, smaller inventories and dependence on a narrow product base. 

Unlike larger firms, they often lack the financial resilience to withstand prolonged price pressures. 

Predatory Pricing Weakens MSME Competitiveness

The study said predatory pricing by foreign producers has squeezed MSMEs through lower price realisation, reduced capacity utilisation, weaker cash flows and constrained investments. It cited sectors such as sublimation paper and mobile phone back covers, where dumped imports forced several units to shut down. 

The report warned that the exit of MSME manufacturers increases downstream industries' dependence on imports, exposing them to currency volatility, supply disruptions and quality risks. 

Downstream Impact Of Duties Found To Be Minimal

The study identified MSME-relevant sectors using a conservative evidence framework based on Udyam registrations, stakeholder inputs and findings from the parent anti-dumping report. 

It also challenged concerns over higher downstream costs, estimating the average impact of anti-dumping duties across 56 product cases at just 0.0227 percent. The report noted that most affected products are intermediate inputs, resulting in minimal cost pass-through to end users. 

Several MSME-Linked Sectors Face Severe Impact

The report identified severe impacts of dumped imports across several MSME-linked sectors. In the sublimation transfer paper, MSMEs in Gujarat and Maharashtra had invested over Rs 275 crore, but many units shut down due to persistent dumping. 

Domestic manufacturers of mobile phone back covers saw their market share fall from around 70 percent to below 20 percent, forcing several small firms to curtail or cease operations. 

In nylon filament yarn, despite investments of Rs 1,564 crore, sustained dumping and an estimated 67.5 percent margin led to significant capacity closures and higher import dependence. 

Report Calls For Timely Anti-Dumping Action

The study stressed the need for timely implementation of DGTR-recommended anti-dumping duties to restore fair market conditions and support MSME investment decisions.

It also urged the Ministry of MSME to review sectors where dumping and injury have been established but duty notifications are still pending. 

MSME Impact Should Be Factored Into Public Interest Assessments

The report urged policymakers to recognise MSME impact as a separate factor in public interest assessments, citing its implications for employment, supplier diversity and local manufacturing ecosystems. 

It also recommended consultations with enterprises in affected sectors to evaluate how delays in anti-dumping measures affect MSME sustainability. 

(KNN Bureau)