Detergent Prices Likely To Rise Alongwith Import Duties on Soda Ash.

NEW DELHI | MUMBAI Detergent prices look set to rise as the government is planning to impose additional duties on the import of soda ash, a key input in its production.

Provisional anti-dumping duties ranging from $11.55 per tonne to $38.38 per tonne will be imposed on imports from the EU, China, Iran and Ukraine, as per a ruling of the Directorate General of Anti-Dumping & Allied Duties that works under the commerce department.

"The government has enough evidence of injury to domestic producers due to dumping of soda ash by certain countries and has decided to impose provisional duties. These will be replaced by final duties once the investigation is completed," a commerce department official told ET. Anti-dumping duties are levied when an exporter ships a product at prices lower than those prevailing at home and in turn causes disruption in the destination country.

The anti-dumping duties recommended by the commerce department will be imposed once the finance ministry notifies it.

Any increase in import duties of soda ash affects detergent manufacturers in the country as the chemical is a key input. The domestic industry includes small players as well as big companies such as HUL and P&G. For low-cost detergents, soda ash makes up as much as a third of the total production cost while for high-end detergent brands it is about 15%.

"Soda ash makes up around 35% of our total raw material cost and it is definitely a big blow for detergent makers. The cost burden will be partly passed to consumers through price hikes. Manufacturers too will have to take a hit on margins," said Sushil Kumar Bajpai, president, Rohit Surfactants, which owns brands such as Ghari detergent. Prices could rise by 10-12% because of the anti-dumping duty, according to calculations by the All-India Detergent Manufacturers Association.

The anti-dumping investigation was initiated following complaints by the Alkali Manufacturers Association of India, a body of companies producing caustic soda and soda ash. These companies complained of price undercutting by importers and said it was causing losses to domestic producers. Inputs were given by domestic manufacturers of soda ash, including Nirma, DCW and Saukem.

The Directorate General of Anti-Dumping & Allied Duties concluded the dumped imports have increased in absolute terms as also in relation to production and consumption of soda ash in India. The imports from the specified countries are undercutting the prices of domestic industry leading to price suppression, it said. "The performance of the domestic industry has deteriorated in terms of capacity utilisation, profit, cash flow, return on investment and inventories, which is significant and material," the report said.

Local soda ash manufacturers have for long been protected by the government against cheap imports with all available tools.

Source : economictimes.indiatimes.com