India cracks down on China’s FKM imports; countervailing duty probe ongoing

September 18, 2018

fluorocarbonIndia has initiated a countervailing duty probe into increased imports of fluoroelastomer (FKM), a fluorocarbon-based synthetic rubber from China, following a complaint from Gujarat Fluorochemicals (GFL),  a part of the $3 billion INOX Group of Companies, and India’s largest producer of chloromethanes, refrigerants and polytetrafluoro-ethylene.

GFL, as the petitioner, is the sole producer of FKM in the domestic market. As per the evidence available on record; production of the petitioner being 100% of Indian production; constitutes total Indian production.

Industrial applications of FKM include hydraulic O-ring seals, check valve balls, electrical connectors;  automotive use in shaft seals, fuel injector O-rings;  and aerospace use in O-ring seals in fuels, lubricants & hydraulic system, manifold gaskets and fuel tank bladders.

The Directorate General of Trade Remedies (DGTR), an arm of the commerce ministry, initiated the investigation.

In the initiation notice gazetted on 14th August, 2018, Gujarat Fluorochemicals  petitioned on behalf of the domestic industry, alleging subsidisation of certain FKM from China and requested for initiation of an anti-subsidy investigation for levy of countervailing duties on the imports of  FKM.

According to the petition: The applicant has alleged that the producers/exporters of the subject goods in China have benefited from the actionable subsidies provided by various levels in the Government of China, including the Governments of the different provinces and municipalities in which the producers/exporters are located, and other ‘Public Bodies’.

The alleged subsidies consist of direct transfer of funds or potential direct transfer of funds or liabilities; Government revenue that is otherwise due is foregone or not collected; provision of goods or services for less than adequate remuneration; and others.

The petitioner alleged  that the subsidised imports of the product are materially retarding the establishment of the domestic industry. The production, sales, capacity utilisation and market share of the domestic industry is quite low considering the demand for the product in the country and considering that the domestic industry commenced commercial production sometime back, the petitioner added.

The 12-month investigation covered January to December of 2017. The injury investigation period shall cover the periods 2014-15, 2015-16, 2016-17, and the period of investigation.

In plain terms, countervailing duty (CVD) is a country-specific tariffs levied on imported goods to offset subsidies made to producers of these goods in the exporting country.

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