by PRANAY SHARMA
In Riyadh’s exclusive club of royals and business tycoons, among whom rank some of the world’s wealthiest, frowns and sneers appear on the faces of its members at the mention of three words—India, Reliance Industries Ltd (RIL) and Mukesh Ambani. Aware of Ambani’s political and economic clout, Riyadh has come around to believe, rightly or otherwise, that it was at his company’s behest that New Delhi has invoked the anti-dumping law against Saudi companies that want to sell polypropylene (aka PP), an important ingredient in making plastic and other items, in the Indian market. Such is the anger and dismay in Riyadh that the anti-dumping controversy threatens to cast a shadow on the strategic partnership that Prime Minister Manmohan Singh and the Saudi king, Abdullah bin Abdul-Aziz Al Saud, fostered through the signing of the Riyadh Declaration last February.
India called the anti-dumping law into use after a complaint was filed against the Saudi companies by RIL, Asia’s largest PP producer which has carved out a 70 per cent stranglehold on the Indian market. Bengal-based Haldia Petrochemicals Ltd subsequently signed on to RIL’s complaint, but its comparatively small share of the market has convinced the Saudi firms of the hand played by Ambani in fanning the PP controversy. India, sources say, has been informed by the Saudi Arabian leadership that it would not “expect such an unprecedented, economically harmful and WTO (World Trade Organisation)-inconsistent approach to be applied to a strategic partner with which one seeks to expand trade and improve relations overall”.
But what exactly is the anti-dumping controversy between India and Saudi Arabia? Employed in the context of international trade, the term anti-dumping has gained much currency after the accession of most countries, including both India and Saudi Arabia, to the WTO agreements. The anti-dumping law is often invoked against a foreign manufacturer for exporting a product to another country at a price much lower than that prevailing in the receiving country’s market. The low price of the product in the manufacturer-exporter’s country is achieved because of the government subsidising the costs involved in its production. Occasionally, it is also initiated against a foreign manufacturer that tries to flood the market of another country in order to bring about a steep decline in prices, consequently muscling out rivals unable to cope with the resultant sustained low prices and losses. Obviously, the lowered prices are good news for the domestic consumers.
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