Safeguard duty on import of chemical used by pharma industry

India has imposed a safeguard duty on import of a chemical used by pharmaceutical and dye industries for 15 months to protect domestic producers.
The Finance Ministry imposed the safeguard duty on Sodium Nitrite (the chemical) following recommendation for the same by the Directorate General of Safeguards (DGS).
Safeguard duty is a WTO-compatible temporary measure that is brought in for a certain time-frame to avert any damage to a country's domestic industry from cheap imports.
In its final finding, the DGS said the increased imports of the chemical have "caused and threaten to cause serious injury to the domestic producers of Sodium Nitrite and it will be in the public interest to impose safeguard duty on (the) imports ...For a period of one year and three months".

India's major source of imports is China and European nations.
The duty will be 30 per cent ad valorem minus anti-dumping duty payable, if any, when imported during the period from February 26, 2014 to February 25, 2015. It would be 28 per cent ad valorem, minus anti-dumping duty payable, if any, during February 26, 2015 to May 25, 2015 period.

Imports of the chemical from developing countries, except China, will not attract the duty.
Acting on the complaint of Deepak Nitrite, the DGS had carried an investigation to gauge the impact of the imports on domestic producers.
Deepak Nitrite had sought imposition of the duty on the imports to protect domestic producers of the chemical against serious injury or threat of serious injury caused by the increased imports of Sodium Nitrite.

The imports have increased from 14,290 tonne in 2009-10 to 22,162 tonne in 2012-13, an increase of 55 per cent.
The imports with respect to total domestic production increased significantly from 43 per cent in 2009-10 to 64 per cent in 2012-13.
As per the DGS, the domestic industry had a market share of 55 per cent in 2010-11. This fell to 51 per cent in the following financial year. It further dipped to 41 per cent in 2012-13.
On the other hand, the market share of import increased from 35 per cent in 2010-11 to 45 per cent in 2012-13.

Capacity utilisation of the domestic industry too declined significantly in the most recent period, from 98 per cent in 2010-11 to 72 per cent in 2012-13.
Sodium Nitrite is a white crystalline powder mostly used in pharmaceutical and dye. It is also used by lubricants, construction chemicals and rubber blowing industries.