The price of soap, shampoos and detergents in India could increase if the government introduces the proposed anti-dumping duty (ADD) on a key raw material, saturated fatty alcohol, Argus Media reported trade association the Indian Surfactant Group (ISG) as saying.
The price of soap, shampoos and detergents in India could increase if the government introduces the proposed anti-dumping duty (ADD) on a key raw material, saturated fatty alcohol, Argus Media reported trade association the Indian Surfactant Group (ISG) as saying.
The ISG has urged India’s finance minister not to implement the new tariff structure, according to the 8 May report.
In February, India’s Directorate General of Trade Remedies, part of the Ministry of Commerce, had recommended a higher ADD rate on imports of all types of saturated fatty alcohol imports from Indonesia, Malaysia and Thailand, Argus Media wrote.
The final finding affects saturated fatty alcohols of chain length C12-C18 and their blends, according to the report. Most Indian imports are of C12-14 and C12-16 grades.
“The extraordinary duties will bring the dreaded inverted duty structure and will render the user industry uncompetitive and will eventually impact the employing capability of these companies as they may be forced to downsize their operation to survive and remain profitable,” Manoj Jha, convener at ISG, was quoted as saying in a letter to India’s finance minister Nirmala Sitharaman.
India had originally imposed ADDs on saturated fatty alcohols from Indonesia, Malaysia and Thailand on 25 May 2018 for a five-year period, the report said.
However, prior to the end of the duty period, Indian oleochemical and personal care producer VVF India (VVF) had filed a sunset review asking for a continuance of duties.
Additionally, VVF had requested an increase in duties as it claimed the ones imposed in the original investigation were inadequate, resulting in continued dumping and injury to them, according to the final findings published by the Ministry of Commerce, Argus Media wrote.
“Given that India is already witnessing high rates of consumer inflation, any further price increase will add to the pain of… Indian consumers,” Jha said in the letter.
“The imposition and continuation of the duty will have a serious and cascading financial impact on all finished goods manufacturers that are users of the product under consideration,” ISG said. “[The] passing of… additional duties to users will eventually lead to high rates of consumer inflation.”
According to the report, the recommended rate of duties would be: US$240-US$263/tonne for imports from Indonesia, depending on the company; US$58-US$250/tonne for imports from Malaysia, depending on the company; and US$107-US$180/tonne for imports from Thailand.
The only companies exempt from the duty would be Indonesia’s Ecogreen Oleochemicals, Musim Mas and Energi Sejahtera Mas, the report said.
The recommended duties would significantly affect costs for producers and users of sodium lauryl sulphate (SLS) and sodium lauryl ether sulphate (SLES) manufacturing detergents, shampoos and other personal care products, Argus Media wrote.
SLS and SLES are downstream products manufactured from saturated fatty alcohols.
These downstream products could be imported free of any basic customs duty from ASEAN countries, while the feedstocks would see elevated import duties, creating the inverted duty structure.
“An inverted duty structure would make the domestic producers of downstream products, who have established sulfonation and ethoxylations plants, uncompetitive in comparison to imports from ASEAN countries,” the ISG said.
“This will lead to closure of downstream facilities due to the presence of many small and medium manufacturers catering to the domestic market.”
The current rate of duty on imports from Indonesia is US$7.10-US$92.23/tonne depending on the company, US$17.64-US$37.64/tonne from Malaysia depending on the company and US$22.50/tonne for imports from Thailand, according to the final findings.
According to the Ministry of Commerce, there are only two producers of SLS and SLES in India - Godrej and VVF.
The finding also stated that there had been a 50% increase in the volume of imports into India from Indonesia, Malaysia and Thailand during the period of investigation from October 2020 to September 2021, compared to the base year of 2018.
During that period, imports of saturated fatty alcohols totalled 104,621 tonnes, while total saturated fatty alcohols demand in India is about 145,000 tonnes/year, according to the filing.
VWF currently accounts for 65% of total domestic production but it has the ability to produce more than 80% of total domestic demand, according to the final findings.
However, due to the large import volumes of saturated fatty alcohols, the company could only use less than 50% of its production capacity.
