DG
Safeguards Initiates Investigation on Electrical Insulators from China, Same
Application filed for Anti-dumping Protection
[Ref: F.No. D-22011/14/2011 dated 30th
May 2012]
Sub:
Initiation of Safeguard Investigation Concerning Imports of Electrical Insulators
into India from China PR.
An application has been filed before me
under Rule 5 of the Custom Tariff (Transitional Product Specific Safeguard
Duty)Rules, 2002, by i) M/s. Aditya Birla Nuvo Ltd., Indian Rayon Compound, Veraval,
Gujarat; ii) M/s Insulators and Electrical Company,1-8, New Industrial Area, PB
Box.1, Mandideep-462046, Madhya Pradesh; iii) M/s. Modern Insulators Ltd., Post
Box No. 23 Abu Road-307026, Rajasthan and iv) M/s. WS Industries (India) Ltd.,
108, Poonamelle Road, Porur,
Chennai-600116, for imposition of Safeguard Duty on imports of Electrical
Insulators into India, to protect the domestic producers of Electrical
Insulators against market disruption and threat of market disruption caused by
the increased imports of Electrical Insulators from China PR.
2. Domestic Industry: The application has been jointly filed by i) M/s. Aditya Birla Nuvo Ltd., Indian
Rayon Compound, Veraval, Gujarat; ii) M/s Insulators
and Electrical Company,1-8, New Industrial Area, PB Box.1, Mandideep-462046, Madhya
Pradesh; iii) M/s. Modern Insulators Ltd., Post Box No. 23 Abu Road-307026,
Rajasthan and iv) M/s. WS Industries (India) Ltd., 108, Poonamelle
Road, Porur, Chennai-600116, for imposition of
Safeguard Duty on imports of Electrical Insulators. The applicants account for
more than 70% of the total production of Electrical Insulators in India. The
petition is also supported by M/s BHEL, New Delhi 110049.
3. Product Involved: The present application is filed for imposition of
Safeguard duty on increased imports of ‘Electrical Insulators, made of
Porcelain / Ceramic or Glass, whether assembled or unassembled, originating in
or exported from China P.R, classified under Heading 85.46 of the Customs
Tariff Act, 1975. The Porcelain/Ceramic Insulators (classified under Heading
8546.20) and Glass Insulators (classified under Heading 8546.10) are considered
as like or similar article considering their characteristics, manufacturing
process, function and interchangeable uses. The domestically produced
Electrical Insulator of Ceramics is comparable to the imported ‘Electrical
Insulators’, made of Porcelain / Ceramic or Glass. The main function of Electrical
Insulator is to insulate one conduction body from another at high voltage areas
or to insulate a body which can transmit electrical energy to the surrounding,
at areas where such transmission of electrical energy has to be avoided.
4. Period of investigation (POI): Present application is a fresh case based on market
disruption/threat of market disruption being faced by the domestic industry.
The POI in the case has been taken from 2008-09 onwards till 2011-12(up to
Dec., 2011).
5. Increased Imports: Imports of Electrical Insulators from People’s Republic of
China into India have shown sharp and significant increase throughout the
injury period. The data relating to imports of Electrical Insulators from
2008-09 onwards as per World Trade Atlas duly verified, is as under:
Import
of Insulators from China PR in MT
|
M |
2008-09 |
2009-10 |
2010-11 |
2011-12 (upto
Dec.) |
|
Ceramic Insulator |
7676 |
9685 |
13768 |
9535 |
|
Glass Insulator |
4358 |
6737 |
12782 |
11706 |
|
Total Import |
12034 |
16422 |
26550 |
21241 |
|
Ceramic % Increase over 2008-09 |
100 |
26 |
79 |
24 |
|
Glass % Increase over 2008-09 |
100 |
55 |
193 |
169 |
|
Total% Increase over 2008-09 |
100 |
36 |
121 |
135 |
It is evident that imports of the
product under consideration have sharply increased during the injury period.
The imports from China P.R have increased from 12034 MT in 2008-09 to 21241 MT
till 2011-12 (Dec.) recording an increase of 135% on annualized basis.
6. Market disruption to the Domestic
industry: The applicants (hereinafter referred to
as DI) have claimed that the increased imports of Electrical Insulators have
caused and are threatening to cause market disruption to the domestic producers
of Electrical Insulators. The increased imports are also undercutting the
prices, forcing the DI to reduce price to such an extent that DI is compelled
to sell at loss. The growth of DI has turned negative and it is unable to
increase its production and sales in tandem with the rate of increase in
consumption. The threat of market disruption is clearly visible from the data
provided by the applicants as detailed below:
a) Production: The domestic production increased up to FY 2010-11, but
declined drastically thereafter. The production index of Domestic Industry fell
to 109 in 2011-12(December, 2011) from 122 in FY 2010-11, as shown below:
TABLE-A
|
Financial Year |
Production (MT) |
Production Indexed |
Imports from China P. R.(MT) |
Imports from China Indexed |
|
2008-09 |
73723 |
100 |
12034 |
100 |
|
2009-10 |
78404 |
106 |
16422 |
136 |
|
2010-11 |
90264 |
122 |
26550 |
220 |
|
2011-12(Dec. 2011) |
60285 |
109 |
21241 |
235 |
The imports from China P. R. continued
to increase rapidly in relation to domestic production in India. The index of
import from China increased to 235. The domestic production index, in comparison,
rose merely to 109 in 2011-12(Dec.).
b) Market Share & Changes in
levels of Sales: The market share of the DI has declined sharply in the
recent period whereas share of the import from China P. R. has increased significantly.
Applicants had a market share of 57.6% in 2008-09 which fell to 53.3% during 2011-12(December);
i.e. a decline of about 4.3%. During the same period, market share of import
from China nearly doubled from 11.8% in 2008-09 to 22.8% in 2011-12(December).
TABLE-B
In
MT
|
Financial Year |
Import from China |
Import from other countries |
Total Import |
Sales of DI |
Sales of other Indian Producers |
Total Demand |
% of Market Share |
||
|
|
|
|
|
|
|
|
DI |
China Import |
Other Countries |
|
2008-09 |
12034
|
1465
|
13499
|
58684
|
29630
|
101813
|
57.6 |
11.8 |
1.4 |
|
2009-10 |
16422
|
739
|
17161
|
65927
|
30805
|
113893
|
57.9 |
14.4 |
0.6 |
|
2010-11 |
26550
|
611
|
27161
|
77059
|
28970
|
133190
|
57.9 |
19.9 |
0.5 |
|
2011-12(Dec.) |
21241
|
454
|
21695
|
49674
|
21769
|
93138
|
53.3 |
22.8 |
0.5 |
Though the sales of the domestic
industry increased up to FY 2010-11, it declined in the most recent period from
77059 MT in 2010-11 to 66232 MT (annualized) in 2011-12. This decline in sales
is despite the fact that the demand increased significantly from 101813MT in
2008-09 to 124184 MT (annualized) in 2011-12. It clearly shows that the DI
suffered discernible loss in sales as well as market share, caused by increased
imports from China P. R.
c) Capacity Utilization: The increasing imports are resulting in significant idling
of production capacity of the domestic producers. The capacity utilization by
the DI has sharply declined in recent period from 78% in 2008-09 to 64% in
2011-12(Dec.) as can be seen in the Table below:
TABLE-C
Installed
Capacity & Production in MT
|
Financial Year |
Installed Capacity |
Production |
Capacity Utilisation (%) |
|
2008-09 |
94680 |
73723 |
78 |
|
2009-10 |
111380 |
78404 |
70 |
|
2010-11 |
122130 |
90264 |
74 |
|
2011-12(in Dec. 2011) |
93810 |
60285 |
64 |
d) Profit/loss – The increased imports are undercutting prices forcing DI
to reduce the selling prices. The profitability of the domestic industry has
steeply deteriorated and the domestic industry is now suffering financial
losses. This is evident from the table below:-
TABLE-D
|
Financial Year |
Profitability (Indexed) |
|
2008-09 |
100 |
|
2009-10 |
53.54 |
|
2010-11 |
29.9 |
|
2011-12 (Dec.) |
(125.9) |
From a position of profit in 2008-09,
the DI is now suffering huge losses.
e) Inventories – In view of surging imports and loss of market share, the
inventories with the domestic industry have also increased significantly. The
table below depicts the inventory levels which have witnessed a massive surge
from 6038 MT in 2008-09 to 8719 MT in 2011-12(December) reflecting the plight
of the domestic industry.
TABLE-E
|
Financial Year |
Inventory (in MT) |
|
2008-09 |
6038 |
|
2009-10 |
6319 |
|
2010-11 |
5959 |
|
2011-12(Dec.) |
8719 |
The DI has been forced to shut down the
production for prolonged period due to accumulation of high stocks.
f) Productivity & Employment: There is increase in the level of
employment keeping in tandem with increasing capacity. The productivity too had
been rising till 2010-11 but has since gone down during 2011-12(Dec.). Due to
loss of market share and accumulation of high inventory, the DI had to stagger
the production and face drop in productivity.
TABLE-F
|
Financial Year |
Production (MT) |
Employment (Nos.) |
Employee Productivity |
|
2008-09 |
73723 |
6130 |
12 |
|
2009-10 |
78404 |
6788 |
12 |
|
2010-11 |
90264 |
6885 |
13 |
|
2011-12(Dec.) |
60285 |
7131 |
11 |
7. The DI has requested in their
application for immediate imposition of Safeguard duty on imports of Electrical
Insulators originating from People’s Republic of China for a period of four years.
They have also requested for imposition of provisional safeguard duty in view
of the steep deterioration in performance of the domestic industry due to
market disruption and the threat of market disruption as a result of increased
imports of the product under consideration from China P. R.
8. The application has been examined
and it has been found that prima facie increased imports of Electrical
Insulators have caused and are threatening to cause market disruption to the domestic
producers of Electrical Insulators and as such it has been decided to initiate
an investigation in the matter through this notice.
9. All interested parties may make
their views known within a period of 30 days from the date of this notice to:
The Director General (Safeguards)
Bhai Vir Singh Sahitya
Sadan; 2nd Floor,
Bhai Vir Singh Marg,
Gole Market, New Delhi-110 001, INDIA.
Telephone: 011- 23741537
FAX: 011-23741542
E-mail: dgsafeguards@nic.in
10. All known interested parties are
also being addressed separately.
11. Any other party to the
investigation who wishes to be considered as an interested party may submit its
request so as to reach the Director General (Safeguards) on the aforementioned address
within 21 days from the date of this notice.