A plea by Reliance Industries (RIL) and Mitsubishi’s MCC PTA India Corp (MCPL) to impose an anti-dumping duty on imports of a key raw material for producing man-made fibre from select countries has come under fire from more than a dozen user companies.
In a meeting with commerce and industry minister Anand Sharma last week, these companies said imports of the purified terephtalic acid (PTA) — used in making polyster staple fibre (PSF), filament yarn (PFY) and film — were already taxed at 5% despite a domestic shortage. Thus, an anti-dumping duty over and above the import duty would raise the import tariff to a higher level and would be “disastrous” for the industrial users, which are already struggling to pass on the rising costs to downstream consumers.
The PTA users, including Indo Rama Synthetics, Filatex India, JBF Industries and Shubhalakshmi Polyesters, expressed fears that the high cost of this key input could further undermine India’s export competitiveness in synthetic textiles that form major chunk of the global textile and clothing market. India’s performance has been far below its potential in this mass-use apparel segment, dominated by China.
The users wrote to Sharma that RIL, by attempting to get anti-dumping duties imposed on PTA only from China, the EU, Korea and Thailand, is also seeking to benefit its recently-acquired PTA plant in Malaysia.
Indo Rama Synthetics chairman OP Lohia said: “This would be ironical, as RIL has been operating its PTA plants at more than 100% capacity.”
A questionaire sent on Thursday to RIL spokesperson Tushar Pania remained unanswered. Anti-dumping duties have been traditionally imposed on filaments and fibres, but PTA has been excluded in recent years.
Of the three producers of the PTA in the country, RIL and MCPL have filed a petition before the directorate general of anti-dumping and allied duties for the impost, although IOC, the third producer, hasn't. RIL alone accounted for 60% of domestic PTA production in 2012-13, while MCPL made up for another 24%.
India produced 3.47 million tonnes of PTA in 2012-13 compared with the demand of 4.12 million tonne and the same level of shortage continued through the last fiscal as well, users said.
“When RIL is running at more than 100% capacity and is undertaking expansion, how does it justify its claim of injury to domestic producers? Moreover, imports of PTA have come down from the 2010-11 level. Had it been a case of dumping, the imports would logically rise and vast domestic capacities would remain idle, which are clearly not the case here,” Lohia said.
The country imported 6,47,959 tonne of PTA in 2012-13, up from 594,913 tonne in 2011-12, which was a bad year for the textile sector, as it was reeling under huge debt and higher raw material costs. However, the country had imported 7,44,370 tonne of PTA in the 2010-11 fiscal.
RIL is setting up another plant with a capacity to produce one million tonne of the PTA a year, expected to be completed by first half of this year. This would be followed by another plant with the same capacity within six months.
The landed price of imported PTA currently stands at approximately R61-62.5 per kg, while domestic producers are selling it even at a slightly lower rate of R60 per kg, industry executives said.
China, too, imports PTA in large volumes from Korea and Thailand and the average imported price for China was 2.5% lower than India in 2013-14.
In such a case, any anti-dumping duty on the raw material will further jeopardise Indian producers' prospects in the finished goods export market vis-a-vis the Chinese, executives from the user companies said.
The users said RIL uses most of the PTA for its own consumption.
So the duty, if imposed, will raise the costs only for others and distort competition by giving undue advantage to RIL, which also produces finished goods from the PTA.
Source : www.financialexpress.com
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