Mumbai, Aug 6: The European Commission is believed to have turned down a government request to widen its scope of investigation into dumping of unbleached cotton fabrics by Indian companies.

The Commission has decided to probe into the exports of only six top textile companies including Century Textiles, Bombay Dyeing and Coats Viyella, say sources. This is the third time that the Commission is resorting to such an exercise.

The government has been lobbying for a bigger sample, representing a cross section of the industry. The Commission in a recent communique to the Textile Exports Promotion Council (Texprocil) has revealed its intentions to stick to the old sample by saying that a wider sample would not serve the purpose, according to industry sources. There is no point in changing the sample as these companies are the major exporters of unbleached cotton fabrics, the Commission has argued.

A senior official in Texprocil refused to comment on the issue by saying that the sample list will reach them only by the end of this week.The sample companies will be sent a questionnaire asking details about the cost of production, international price, domestic price etc. The time period for the investigation has been changed from one year to 18 months. This means that exports for the last 18 months will come under the purview of probe. The Commission is keen on imposing the provisional duty before September, sources say.

The government is all set to file a petition to the dispute settlements forum of the World Trade Organisation soon against EC's decision to start investigation. The petition is likely to be filed next week, ministry sources said.

The petition has become imperative as the government's efforts to rally support from the European user industry failed to elicit a good response, according to sources. Repeated attempts by the government to convince the Commission about the baselessness of its argument met with little success. The Commission is trying to create a protectionist mechanism after the phasing out of the quota system in 1999, according to industry observers.A section of the industry has expressed its reservations over the government's handling of the issue. Despite intense lobbying, the EC is hell-bent on imposing the duty, they said. The re-investigation was started on July 11 after the provisional anti-dumping duty was withdrawn in May. The provisional anti-dumping duty imposed last year had adversely affected the performance of major textile companies. Century Textiles has cited anti-dumping duty as the major reason for the decline in its profit by 99 per cent.

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