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Ranvir Nayar
Brussels, Sept 4: After steel and textiles, the European Commission (EC) has imposed countervailing duty up to nearly 40 per cent on polyethylene terepthalate, or PET films, imports from India. The EC's move came after almost a year of anti-dumping and anti-subsidy investigations against a number of Indian PET film exporters following complaints from various European Union (EU) manufacturers.
In a regulation, the EC said that following complaints from Du Pont and Hoechst, along with several other EU manufacturers, it had initiated the anti-subsidy and anti-dumping proceedings against Garware Polyester, Jindal Polyester, Flex Industries, MTZ Polyesters and Polyplex Corporation.
Of these, the Bombay-based MTZ Polyesters has been hit the hardest, with a countervailing duty of 37.5 per cent. The Delhi-based Polyplex has also been hit with a 20.3 per cent countervailing duty, while Garware and Jindal havebeen penalised with nearly 7 per cent each.
The EC action is based on investigation of a number ofschemes of the Indian government which the EC considers as being export subsidies. These includethe passbook scheme, the duty entitlement passbook (DEPB) scheme, the export promotion capital goods scheme (EPCGS), export oriented unit (EOU) and Export Promotion Zones and the income tax schemes of the federal government. The EC also examined various other schemes of different state governments where the manufacturing units of the penalised companies are located. These include sales tax incentive schemes and octroi reliefs. The complainant companies had alleged that these schemes were violative of the Indian agreements under the World Trade Organisation (WTO) and hence should be scrapped.
However, in its response, the Indian government maintained that these schemes were simply "set-offs" against taxes that the Indian companies had to face and that these schemes were WTO-compatible.
In its provisional regulation, the EC rejected the Indian stand in some areas like DEPB and EPCGS, saying they were against theWTO regulations and hence attracted the countervailing duty. However, in some other schemes like the EOU, and sales tax breaks were found compatible with the WTO rules and hence no action was taken on them.
The EC also held that the PET film consumption in the EU area increased by 15 per cent in the period concerned, but the Indian marketshare had risen dramatically from about 3 per cent of the total consumption to nearly 10 per cent in the debated period. The EC also maintains that the prices of the Indian products in the EU area declined by 48 per cent in the corresponding period and claims that the Indian companies undercut the EU prices by as much as 50.5 per cent, pushing the EU industry's share of the PET film market to just over 50 per cent, down from 57 per cent earlier.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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