Foreign Companies Dumping Cheap Optic Fiber In India “Hurting” Local Producers To Attract Financial Penalties?

Chinese telecommunications equipment could soon attract "Anti-Dumping Duty" as it is allegedly hurting local producers. Manufacturers from a few foreign countries are selling their products at artificially-lowered rates with nefarious intentions, accused DGTR (Directorate General of Trade Remedies)

DGTR, the investigative arm of the Commerce Ministry in the Indian central government, has strongly recommended implementing a harsh and presumably steep duty on imported optical fiber cables. Let's look at the latest developments in the world of telecommunications.

Cheap Optic Fiber Flooding Indian Markets And Hurting Local Producers?

India is in the middle of a massive, nationwide digitization drive. Through the ambitious rural outreach program called Bharat Net, India hopes to ensure all Gram panchayats have access to broadband internet.

The fastest way to ensure reliable internet connectivity is through the use of fiber optic cable, which has become quite affordable even for regional players. However, the DGTR claims these cables are cheap because a few foreign manufacturers are artificially keeping the prices low.

Optic fiber cables from China, South Korea, and Indonesia are being sold in India at artificially low rates, to capture the domestic market and hurt the local competition in order to drive them out of business, the DGTR has alleged.

The DGTR had initiated the investigation under Rule 5(3) of the Anti-Dumping Rules, 1995 and its report established "material injury to the domestic industry". The investigation found a "severe impact of dumping on Indian makers". "It was found that such imports have increased in absolute as well as relative terms to the production and consumption in India."

"The growth in demand was almost entirely subsumed by such dumped imports," said the report and added the domestic industry was able to retain its market share only by selling 'like article' at losses.

Will India's Digitization Drive Be Negatively Impacted By The Anti-Dumping Duty?

The DGTR has essentially recommended that foreign-origin optic fiber attract "Anti-Dumping Duty". The measure, if approved, will certainly help the domestic industry. It would also benefit foreign companies involved in the "Make In India" initiative.

Local producers such as Sterlite Technologies (STL), Birla Cable, Birla Furukawa Fibre Optics, HFCL, and American Corning would obviously welcome any step that protects their interests. However, India is one of the fastest-growing markets for digital consumers.

Only 33 percent of the towers in India are interconnected using optic fiber cables. This is woefully low, compared to 70 percent in South Korea and 80 to 90 percent in the U.S., Japan, and China," observed a report on the matter.

Optical fiber is a key component in the development and deployment of digital infrastructure for India. Hence, the country should have an active manufacturing setup, the Indian government has argued.

If foreign manufacturers dump their products at artificially lowered rates, the domestic players could be forced to shut shop. Incidentally, most of the local producers are currently struggling with overcapacity and a lack of orders.

Leading Indian optic fiber manufacturers have collectively complained about cheap imports, claiming cheap fiber optic cables from China, Indonesia, and South Korea are hurting them. If the anti-dumping duty is enforced, most of the service providers will be compelled to buy from Indian manufacturers. It is not clear if these actions from the central government will drive up the price of the optical fiber cables and the cost of laying the next generation of telecommunications infrastructure.