Fast moving consumer goods giant Hindustan Unilever Ltd (HUL), along with a few associations for glass and detergents, has filed writs in the Delhi and Bombay High Courts to get a stay against a safeguard duty imposition of 20 per cent on import of soda ash from China. The duty was imposed on April 20 by the Directorate General of Safeguards (DGS).
Apart from HUL, the others who have filed the petitions in the Bombay and Delhi High Courts include Saint Gobain, the Maharashtra Small Scale Detergent Manufacturers and the All India Glass Federation. More companies are also in the process of filing petitions.
The DGS report was filed on January 16 and published on January 30 in the Gazette of India, on the basis of an application filed by the Alkali Manufacturers Association of India (AMAI). The association asked the DGS to look at the increasing imports of disodium carbonate, popularly known as soda ash, threatening to cause market disruption to the domestic industry.
The application to the DGS was filed on behalf of Tata Chemicals, Gujarat Heavy Chemicals Ltd (GHCL), Saurashtra Chemicals, Birla Sagar, DCW and Nirma, whose production of soda ash accounts for more than 90 per cent of the domestic production.
Based on the DGS’ report, the Union government has imposed a safeguard duty, at the rate of 20 per cent ad valorem on import of soda ash from China. The safeguard duty imposed is effective up to and inclusive of November 5 unless revoked, superseded or amended earlier.
Detergent and glass manufacturers are the primary users of soda ash. For instance, soda ash constitutes 40 per cent of the cost of detergents, a Rs 10,188 crore market.
More From This Section
While import of soda ash from China has not been favoured into the country since 2000, the reason domestic companies are now objecting to the newly imposed safeguard duty is due to the growing global presence of domestic soda ash manufacturers and their control on domestic and international pricing of soda ash in countries like Kenya, Romania, the US and Africa. For instance, Tata Chemicals is the second largest soda ash manufacturer globally, with manufacturing capacities in Kenya, UK and Netherlands. Whereas GHCL is the fourth largest soda ash producer in the world.
“Local soda ash manufacturers are having a monopoly in the pricing of soda ash in the domestic and some international markets and are charging a 40 per cent higher rate than the market rate in China for soda ash,” said a source from Fena Detergents.
Soda ash importers are also unhappy with the DGS’s recommendations as they were not given a chance to represent their case. “It (DGS) has adopted an ad hoc and arbitrary approach in violation of the basic principles of natural justice. Within two days of AMAI filing petition on January 14, the DGS initiated proceedings for imposition of safeguard duty,” said an industry source who did not want to be named.
Additionally, import data provided by the petitioners (AMAI) show imports of soda ash from China in 2008 was around the same levels as the previous years.