n response to an appeal by Polypropylene (PP) producers in India-Reliance Industries, supported by Haldia Petrochemicals Ltd (HPL), the Union ministry of commerce has issued a notification recommending a provisional anti-dumping duty on PP imported from Saudi Arabia, Oman and Singapore. >From the current customs duty of 5%, a range of duty on imports has been recommended for PP:
>From Oman, the duty will vary from 29.31% to 243.7% in case of non-cooperative producers and exporters
For Singapore it will range from 5.08% to 235.35%
For Saudi Arabia from 1.89% to 185.68%
The directorate general of anti-dumping and allied duties noted in the notification: "The profitability of the domestic industry was adversely affected during the period of investigation. During this period, while the cost of sales was 148 (indexed) with 2005-06 as the base year, the selling prices could rise only from 100 to 127 during the corresponding period. In short, the domestic industry could not raise prices in proportion to the increase in costs during the period of investigation. As a consequence, there was a sharp decline in the profitability."
The provisional anti-dumping duty would be applicable for six months, during which the hearing will continue before the director general of anti-dumping duty. If found that the domestic industry has not been hurt, the provisional levy could be withdrawn and the importers be refunded on the extra duty paid during the period. Else, the duty could be extended up to five years.
The domestic plastic processing industry is apprehensive about the impending duty, and expects prices to rise significantly. In some cases, just the amount of anti-dumping duty on the commodity is around $1,033/ton which will be topped by a 5% customs duty. The price of the product in the international market is around $1,100, and this would mean the price of imported PP would practically double, making imports unviable.
Currently, around 15-20% of the domestic PP requirements are imported. The sectors most likely to be affected by this notification include packaging, woven sacks, containers, auto-components, pipes, water tanks, furniture, medical appliances, among others. Most of the units associated with processing are small and medium enterprises (SMEs) and feared that a price rise in the domestic market could hurt them.
India's current PP capacity is approximately 2.84 mln tpa including Reliance's addition of 900,000 tpa at its Jamnagar facility in Q4'08, and Haldia's 2.75 lakh tpa