Detergents may Cost more if Govt Imposes Duties on Key Ingredient

Prices of soaps, detergents and shampoo could go up if the proposed antidumping duty and countervailing duty on the key raw material saturated fatty alcohol is implemented, a move opposed by the Indian Surfactant Group (ISG), which has urged the finance minister not to implement the new tariff structure.

"The extraordinary duties will bring in the dreaded inverted duty structure and will render the user industry uncompetitive and will eventually impact the employing capability of these companies as they may be forced to downsize their operation to survive and remain profitable," Manoj Jha, convener at ISG, said in a letter to Union Finance Minister Nirmala Sitharaman.

Two months ago, the Directorate General of Trade Remedies, under the commerce ministry, recommended a higher rate for anti-dumping duty with additional countervailing duty on imports of saturated fatty alcohols (SFA) from Indonesia, Malaysia and Thailand.

"Increasing the cost of the end product will make the end product less competitive and undesirable in the market. Given that India is already

witnessing high rates of consumer inflation, any further price increase will add to the pain of the Indian consumers," said the ISG letter.

The recommended antidumping duty and countervailing duty will also have a significant cost impact on producers, and users of sodium laureth sulfate

(SLS), who manufacture end products such as detergents, shampoos and other hygiene-related products.

"While there is still no clarity on the extent of final price increases, there will definitely be an impact on our production cost which will be passed on to the final consumers," said Sushil Kumar Bajpai, president, RSPL Group, which makes Ghari detergent and Venus soap.

Under the free trade agreements, SLS as a final product is subjected to 5% duty compared to SFA, which is subjected to far higher duties at an intermediary stage. Now, with the levy of countervailing duties, it will lead to an inverted duty structure, which will incentivise higher imports of downstream products such as SLS and finished goods such as shampoos, leading to loss of business and employment, said the industry body.

"Levy of CD or continuation of ADD would neither be in the interest of the domestic industry as the imports would shift to downstream products or in the interest of the downstream manufacturers as the value addition in India would shift overseas or in the interest of consumers as it would result in higher prices of daily use cleaning products," Jha said in the letter.