Industries from chemicals to textile yarn are working to convince Delhi that the country needs to take a more protectionist tack. Jayanta Dey / Reuters

Trade bodies for Indian industries such as chemicals, steel, pharmaceuticals, textile yarn, machinery, and glass have all been lobbying hard for Delhi to take a more protectionist stance.

But Delhi has stuck doggedly to World Trade Organisation rules.

At the start of December, RR Gokhale, secretary general of the Indian Chemicals Council, flew from Mumbai to Delhi to meet senior civil servants in the ministries of chemicals, commerce, and finance.

With him, were 15 senior executives from India’s chemicals industry.

Their mission: to lobby for the import tax on chemicals to be more than doubled to protect his members, mostly medium-sized producers, who are struggling to survive after a surge in cheap imports.

“Our Indian Chemicals Council is very strongly advocating to the government that in view of this meltdown, let there be a straight 10 per cent duty increase, taking import duties from 7.5 per cent to 17.5 per cent,” he says.

“We went four months back, when the meltdown was seen on the horizon,” he said.“We were there for two to three days a week, for four to five weeks.”

Mr Gokhale’s members have seen a surge in cheap chemicals coming in from China, as Chinese producers look for alternative markets.

“China’s major market was the USA – now because of the US problem, the Chinese producers are targeting India. There’s a surge in imports, and because of that the local producers are suffering. The prices have fallen down almost 50 per cent. That’s a major threat.”

But no matter how many doors they knocked on, how many civil servants they wheedled and flattered, they hit a brick wall.

“We are not getting through,” he complains. “We have received nothing in writing, but the government is not prepared to do it because it is not in the line with WTO agreements.”

India’s industrial old guard enjoyed highly protectionist import duties up to India’s liberalisation in the early 1990s. Gokhale remembered when import duties on chemicals were at a prohibitive 180 per cent.

But they have had little luck fighting India’s slow opening up over the last 15 years.India has too much at stake as an exporter to risk angering the WTO.

AK Gupta of TPM Consulting, who has a near monopoly on advising Indian companies seeking protection under the WTO regime, says: “India is extra cautious of the WTO: they will not do something which is not in line with the law.”

Indian industry’s only option, then, is to use one of the three processes permitted under the WTO agreements – anti-dumping duties, safeguard measures and countervailing duties.

“The time taken for getting a relief is a minimum of one year – so it’s not really an effective remedy for a global recession,” Mr Gupta said.

“It takes 18 months: by the time the duties are imposed, you are finished,” complained Mr Gokhale.

The chemicals council has been encouraging its members to initiate anti-dumping procedures, calling Mr Gupta to speak at a conference on it earlier this year.“Wherever it is required people are filing, there is no alternative way out for the domestic industry,” he says.

India has 14 anti-dumping procedures against China launched under the WTO guidelines. It has also recently put in place safeguard arrangements.

Last month, Mr Gupta initiated the country’s first application for countervailing duties for Deepak Nitrite, which is arguing that China is unfairly subsidising its Sodium Nitrite producers. Mr Gupta is building the case on a similar anti-subsidy move by US nitrite producers.

Contrary to those who fear a wave of tit-for-tat protectionist measures, the problems faced by Indian industry have not so far led to a notable increase in them.Mr Gupta said: “There has not been a significant increase in anti-dumping cases in the first three months of this year. Whether increasingly people will come to me, I don’t know.”

He said that only five anti-dumping cases were under preparation, which have not yet been initiated. He is working on three of them.

“I have three to four applications, and three to four discussions going on: that’s a normal number of cases for me over the past 10 years.”

He said the sheer length of time the process can take deterred industries seeking emergency help.

“These are immediate problems and this is a long drawn-out process which can not provide immediate relief.”

GV Nirmal, a senior executive at Kajaria Ceramics in Delhi, started working on an application for anti-dumping measures nine months ago.

It took five months to initiate the process, and he has been waiting four months since then for a preliminary judgement. After that, he expects it to be another six months before a duty is in place.

“It’s very, very slow. That is the reason we are suffering.” He said: “The Chinese built large manufacturing tile facilities two years ago, and ocean freight has been reduced to very nominal rates, so they are dumping in a big way. It’s beginning at $1.5-$2.5 a metre – it should not be less than $4. For the last two months, Chinese imports have been increasing by 4-5 per cent every month.”

Part of the problem is the number of staff India has in its Directorate General of Anti-Dumping – just 20. Staff at the European Union and US equivalent are numbered in the hundreds.

As a result it takes European companies seven to nine months to get anti-dumping duties imposed, Mr Gupta said, while Indian companies have to wait 12 to 15 months.For Mr Gokhale, the only hope is that the new government that comes in after next month’s general election will have fewer scruples.

“When the new budget comes with a new government, we will have to approach the government,” he says.

Richard Orange

rorange@thenational.ae

Source: www.thenational.ae