DG Safeguards Drops Safeguard Duty on Sodium di-chromate in Final Findings – No Significant Injury to Domestic Industry Noticed, Causal Links to Imports Absent, Consumer Interest Protected

[F.No. D-22011/5/2014 dated 15th January 2015]

Click here for full text of Final Findings

Sub: Safeguard investigation concerning imports of Sodium di-chromate into India.

Conclusion of Investigation [Excerpt from Final Order]

On examination of relevant factors I find that:

(i)   There has been a significant increase in imports in absolute terms as well as in relation to production.

(ii)  Despite increase in imports during the period of investigation both in absolute term and in relation to production, imports have not affected relevant economic parameters viz production, sales, productivity, employment, capacity utilization and inventory so as to cause serious injury to the domestic industry. In fact some of the factors like production, productivity and inventory show sign of improvement in year 2013-14 whereas reason for decline in sales in 2013-14 is that the domestic industry has used more quantity of PUC for captive consumption and released less quantity for domestic sales. Their market shares in the domestic market in 2013-14 although decreased but still more than their share in the first two years of the period of investigation.

(iii) Other factors like decline in exports, capacity restrain in view of restriction imposed by the Pollution Control Board, increase in cost of sales and sale of PUC at a price lower than landed price/cost of sales of the PUC are some of the factors which have caused injury, if any, to the domestic injury. Hence there is no causal link between increased imports and injury caused to the domestic industry.

(iv) The domestic industry is not able to demonstrate that increase in imports is due to existence of unforeseen circumstances.

(v)  It is not the case where the domestic industry is only producing and selling Sodium dichromate. The domestic industry has also been consuming significantly large quantity of its production of the Sodium dichromate to produce the downstream products and hence in direct competition with the manufacturers of downstream products. Any imposition of safeguard duty would give undue advantage to domestic industry vis-s vis downstream product producers as producers of downstream industry on one hand have to pay higher rate of import duty and on the other hand have to compete in downstream product market with the same domestic industry who would get the benefit of safeguard measures. Therefore, imposition of safeguard duty is not in public interest.

(vi) Adjustment plan submitted by the domestic industry has no time frame for implementation of its alternate CO2 acidification process so as to show that the domestic industry would adjust to heightened competition from foreign suppliers in near future

(vii) Though there is increase in imports of PUC yet such imports, in my view are not causing significant overall impairment to the DI. On the basis of analysis made above, I find that the DI at the most seems to be suffering injury, since they are not able to make profits with regard to the PUC. However, the DI is in profits in totality. The profits made could be partly used to compete with the increased cheaper imports of PUC. In fact in the November 2014, the domestic industry has announced 10% dividend which also shows that overall position of the domestic industry has improved. The protection under the Safeguard law is an emergency measure and therefore, has to be extended when the injury in a case causes ‘significant overall impairment’.

Recommendations

In view of the above, in my view, the DI does not deserve to be protected by imposition of safeguard duty and the investigation in this case is terminated, accordingly.