Unwrought Aluminium under Safeguard Investigation on Vedanta, BALCO and Hindalco Complaint

·   Import Share in Total Market Remains Constant in Five Year POI, Production Increases

·   Increased Imports Said to Hurt Industry

[Safeguard Initiation Notice No. D-22011/10/2016/Pt-II dated 19th April 2016]

Sub: Initiation of Safeguard Investigation concerning Imports of “Unwrought Aluminium (Aluminium not alloyed and Aluminium alloys)” into India.

An application has been filed before me under Rule 5 of the Customs Tariff (Identification and Assessment of Safeguard Duty) Rules, 1997, by (i) M/s. Vedanta limited –Aluminium & Power, Bhurkamunda, Distt. Jharsuguda-768202, Odisha (ii) M/s Bharat Aluminium Company Ltd, Aluminium Sadan, Core-6, Scope Office Complex, Lodi Road, New Delhi-110003 and (iii) M/s Hindalco Industries Limited, Century Bhavan, 3rd Floor, Dr. Annie Besant Road, Worli, Mumbai 400030 for imposition of Safeguard Duty on imports of Unwrought Aluminium (Aluminium not alloyed and Aluminium alloys)” into India to protect the domestic producers of Unwrought Aluminium (Aluminium not alloyed and Aluminium alloys)” against serious injury /threat of serious injury caused by the increased imports of Unwrought Aluminium ( Aluminium not alloyed and Aluminium alloys)’’

2.   Domestic Industry

The application has been jointly filed by (i) M/s. Vedanta limited – Aluminium & Power, (ii) M/s Bharat Aluminium Company Ltd and (iii) M/s Hindalco Industries Limited for imposition of Safeguard Duty on imports of “Unwrought Aluminium”. On perusal of the application and latest data provided by the Applicants it is seen that the applicants account for more than 50% of the total production of “Unwrought Aluminium (Aluminium not alloyed and Aluminium alloys)” falling under Tariff Heading 7601 in India and hence, the applicants qualify as Domestic Industry in the product “Unwrought Aluminium (Aluminium not- alloyed and Aluminium alloy)” .

3.   Product Involved

The product under consideration Unwrought Aluminium (Aluminium not alloyed and Aluminium alloys) (hereinafter referred to as PUC) is classified under Customs Tariff Heading No.7601 of Chapter 76 of the Customs Tariff Act 1975.

4.    Period of investigation (POI)

Present application is based on serious injury /threat of serious injury to domestic industry caused by increased import of PUC. The Period of Investigation in the case has been taken from 2011-12 onwards till 2015-16 (Annualised).

5.    Source of information

The import data till January, 2016 for the product under consideration has been taken from Export Import Data Bank, Ministry of Commerce (http://www.commerce.nic.in/eidb/icomq.asp) and the domestic data from 2011-12 to 2015-16 has been submitted by the applicant and the same has been verified from the excise records and taken into consideration for analysis.

6.    Increased Imports

Imports of PUC into India have shown significant increase. The data relating to imports of Unwrought Aluminium (alloyed and not alloyed) from 2011-2012 onwards is as under:

Financial Year

Total Import (MT)

Import Indexed

2011-12

242533

100

2012-13

308279

127

2013-14

348889

144

2014-15

343428

142

2015-16 (April - Jan, 2016)

360308

 

2015-16 (Annualized)

432370

178

It is seen that in the imports of the PUC there is a substantial increase during the injury period. The imports have increased from 2,42,533 MT in 2011-12 to 4,32,370 MT till 2015-16 (Annualized.) recording an increase of 78%.

7.    Serious Injury to the Domestic industry

The applicants (hereinafter referred to as DI) have claimed that the increased imports of PUC have caused and are threatening to cause serious injury to the domestic producers of PUC. To support their case of the threat of serious injury to the domestic industry they have supplied the data with regard to various performance parameters and the same has been analysed as detailed below:

a)   Production of DI: The figures of domestic production of DI during the period of investigation are as shown below:

Financial Year

Production (MT)

Production Indexed

2011-12

887286

100

2012-13

931776

105

2013-14

1051100

118

2014-15

1353271

153

2015-16

1563639

176

It is observed that the production of PUC of the DI has increased over the investigation period.

b)   Increased Imports w.r.t total production: PUC is imported into India from a number of countries, and mainly from UAE, Malaysia, Russia, South Africa, Oman, Qatar, Baharain, and Thailand. Though the imports of PUC have increased in absolute terms, their share when compared to the total production has more or less remained the same as is seen from the import and production data of PUC during the financial year 2011-12 to 2015-16 (Annualized) as under:

Financial Year

Total Imports (MT)

All India Production (MT)

Percentage of import with respect to all India production

2011-12

242533

1927464

13

2012-13

308279

2073367

15

2013-14

348889

2088900

17

2014-15

343428

2549372

13

2015-16

432370 (Annualised)

2818978

15

The Imports in absolute terms have increased from 2,42,533 MT in 2011-12 to 4,32,370 MT in 2015-16 (Annualised) which shows an increase of approximately 78%. The import as a percentage of total production was 13 % in 2011-12 and it has increased to 15% in 2015-16.

c)   Market Share & Changes in levels of Sales:

(In MT)

Financial Year

Import

Sales of Domestic Industry (DI)

Captive consumption

Sales of other Indian Producers

Total Demand

% of Market Share

 

 

 

 

 

 

 

Import

DI(excluding captive)

DI (including captive consumption)

Others

2011-12

242533

636917

443811

945192

2268453

11

28

48

42

2012-13

308279

718198

567975

997410

2591862

12

28

50

38

2013-14

348889

671085

618920

940006

2578900

14

26

50

36

2014-15

343428

670398

605452

1134836

2754114

12

24

46

41

2015-16

432370*

893565

537977

1063907

2927819

15

31

49

36

*(Annualised)

During the period 2011-12 to 2015-16 the demand of the product has increased. The market share of import has increased from 11% in 2011-12 to 15% in 2015-16. During the same period the share of domestic industry only increased from 28% to 31% despite a significant level of increase in production capacities involving large capital investment. When calculated along with captive consumption, the share of DI remained stagnant at close to 50%.

d)   Capacity Utilization: The installed capacity includes products of other tariff headings also. However, the capacity utilisation has been calculated with regard to actual production of Tariff heading 7601. The increasing imports are resulting in significant idling of production capacity of the domestic producers as can be seen in the Table below:

Financial Year

Installed Capacity (MT)

Production (MT)

Capacity Utilisation (%)

2011-12

2325096

887286

38

2012-13

2317954

931776

40

2013-14

2557393

1051100

41

2014-15

2904841

1353271

47

2015-16

3258465

1563639

48

e)   Profit/loss –The profitability of the domestic industry has deteriorated in the recent year (2015-16) and the domestic industry is now suffering financial losses. This is seen from the table below:-

Financial Year

Profitability: Domestic profit (Rs. Lacs) (Indexed)

2011-12

100

2012-13

39

2013-14

7

2014-15

89

2015-16 (Annualized)

(275)

f)    Inventories –The figures of inventories with the domestic industry are as shown below:

Financial Year

Index

2011-12

100

2012-13

53

2013-14

46

2014-15

97

2015-16

49

It is observed that the inventory levels have fluctuated and have decreased between 2014-15 to 2015-16.

g)   Productivity & Employment: There is increase in the level of employment keeping in tandem with increasing capacity. During the period 2011-12 to 2015-16, the domestic industry has been able to improve the productivity.

Financial Year

Production (MT)

Productivity per day (MT)

Employment (Indexed)

2011-12

887286

2535

100

2012-13

931776

2662

95

2013-14

1051100

3003

112

2014-15

1353271

3866

111

2015-16

1563639

4468

105

8.   The DI has requested in their application for immediate imposition of Safeguard duty on imports of alloyed and not alloyed unwrought Aluminium into India 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 as a result of increased imports of the product under consideration.

9.   After examining the application on different economic parameters, it is seen that prima facie, despite improvement in productivity, increased imports of PUC (alloyed and not alloyed unwrought Aluminium) in absolute term have caused losses to the domestic industry and are threatening to cause serious injury to the domestic producers of the PUC and as such it has been decided to initiate an investigation in the matter through this notice.

10. 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

11. All known interested parties are also being addressed separately.

12. 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 15 days from the date of this notice.