India’s plastic processors oppose DGTR’s safeguard investigation on PVC import from Japan

India’s plastic processors have flocked together to oppose the initiation of a Safeguard (Quantitative Restrictions) investigation on the import of Suspension Grade Polyvinyl Chloride (PVC) resin from Japan. In a written submission to the Directorate General of Trade Remedies (DGTR) under the Ministry of Commerce and Industry, plastic processors feared that the imposition of a quantitative restriction through safeguard investigation would squeeze the availability of the plastic raw material which India is in huge deficit.

“We have decided to oppose it as the quantitative restrictions would have a major impact on the user industries. We have already made a representation to the government seeking immediate halt of the investigation of which we are awaiting a response,” said Deepak Ballani, Director General, All India Plastics Manufacturers Association (AIPMA), India’s premier industry body which represents lakhs of downstream plastic producers, to Polymerupdate.

The plastics processors’ submission comes after the DGTR, a few weeks ago, sought a response from leading representative bodies across the plastic value chain about the possible implication of quantitative restrictions as a safeguard measure, in response to a joint complaint filed by India’s three primary PVC producers viz DCW Ltd, DCM Shriram Ltd and Chemplast Cuddalore Vinyls Ltd. These producers claimed to have suffered a serious injury due to a sharp increase in import of PVC suspension resins having residual VCM content above 2 PPM (parts per million) from Japan under India-Japan Comprehensive Economic Partnership Agreement.

Under the aegis of the All India Plastic Manufacturers Association (AIPMA) and the Organisation of Plastic Processors of India (OPPI), leading plastic processors from across India congregated recently in Mumbai to discuss the DGTR’s September 8 notification which confirms the initiation of a Safeguard investigation. Participation in this congregation unanimously decided to oppose the DGTR’s move vehemently.

Although, the three complaining Indian primary PVC resin producers do not produce the same quality product that matches the imported one, the quality of the domestic product is close to that of the imported one and hence, easily replaceable. They feel that its sustained increase in imports in the past few years has reduced sales of domestic PVC resin producers. As a consequence, the complainants sought safeguard measures through quantitative restrictions on PVC resin import from Japan. The applicants, however, have not sought the imposition of any safeguard duty on the product.

This is one of a few rare occasions when the downstream user industries are confronted with India’s primary producers for issues concerning international trade. User industries presume that the quantitative restrictions as proposed by the three aforementioned primary producers would have a catastrophic impact on the availability of PVC in India, its price would escalate and eventually add to the inflationary pressure of the manufacturing and service industries.

In a joint application filed earlier, India’s aforementioned primary producers have claimed a sharp increase in its import from Japan since the partnership agreement signed between the two countries (India-Japan). But, the fact of the matter is that India is an imported-reliant country for PVC. For all varieties of PVC, India cumulatively imports around 55 percent of the country’s total annual resin demand. India currently produces around 1.55 million tonnes per annum of PVC against the country’s total consumption of 3.42 million tonnes.

Under the bilateral agreement, India’s import of PVC attracts ‘nil’ duty. Hence, Japan has become India’s leading PVC supplier over the last few years, followed by Taiwan and China as second and third.

“How can quantity restrictions work when the demand for PVC exceeds domestic production? So, we are going to oppose the DGTR’s initiation of an investigation. We will be making our submission to the DGTR soon,” Deepak Lawale, Secretary General, Organisation of the Plastics Processors of India (OPPI), told Polymerupdate.

According to DGTR notification, the three petitioning companies together constitute more than 25 percent of India’s overall PVC production. Keeping in view of that, the two other primary PVC-producing companies such as Reliance Industries Ltd and Finolex Industries Ltd have not opposed the safeguard (Quantitative Restriction) petition.

DGTR notification said that PVC imports from Japan jumped by 367 percent in the financial year 2021-22 compared to that in 2020-21. The petitioners have claimed that India’s PVC import increased primarily due to a number of unforeseen factors, including the increase in the cost of petrochemical products. This has led to an increase in the cost of production of PVC Suspension resin produced through the VCM route.

DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com