| Date: |
26-07-2011 |
| Subject: |
Safeguard Duty On Key Cemical To Impact Rubber Industry |
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NEW DELHI: Margins oftyre and rubber industry will take a hit after India has deciding to impose steep safeguard duties on a key chemical used in processing despite protests from the European Union and the US. Thesafeguard duty on the chemical (PX-13 ) is aimed at protecting the domestic industry against a surge in imports causing losses. It will be levied at 30% of the imported value in the first year and 25% in the second year, as per a notification. India is largest producer of the chemical.
"The decision to impose safeguard duty was taken as there has been a significant increase in imports despite imposition of anti-dumping duties ," a government official told ET. The landed price of imports is lower than cost of production and selling price of domestic industry resulting in price suppression," he added. Certain companies from the EU and China, which have already been penalised with anti-dumping duties for selling in India at prices lower than that prevailing in their domestic markets, will have to pay the difference between the two levies, a government official explained.
NOCIL, in its complaint filed to the director general of safeguards, had stated that given the surge in imports , the domestic industry may not find market for additional capacities that are coming up. DG safeguards conducts safeguard investigations and recommends duties which is ultimately notified by the finance ministry. The user industry, which includes tyre manufacturers like JK Industries ,CEAT,Apollo Tyres, Birla Tyre,MRF and Metro tyres, would now have to pay a higher import duty on the chemical.
The Automotive Tyre Manufactuer's Association is apprehensive that the duty may affect input prices in the future . "Once the domestic industry builds the additional capacity, the user industry will entirely be at the mercy of domestic producers which will make the Indian tyre industry uncompetitive ," the association said in a representation to DG safeguards.
Source : economictimes.indiatimes.com
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