Page 185 - CW E-Magazine (19-9-2023)

Special Report

Preventing losses incurred due to cheap imports –

A case study of Chemplast Sanmar

hemplast Sanmar Ltd. recently project promoters to N.S. VENKATARAMAN
reported a consolidated net loss venture to set up ad- Director
Cof Rs. 64-crore in the fi rst quar- ditional capacity. Nandini Consultancy Centre
ter of 2023-24 (Q1FY24), as against a Chennai - 600090
consolidated net profi t of Rs. 4-crore in Competitiveness of Email: nsvenkatchennai@gmail.com
Q1FY23. Indian production
In the case of Table 2: Country-wise PVC imports, FY23
This has surprised investors and several chemicals including PVC, it [Tonnes]
industry observers, as the company is seen that the operational parameters Country Import Share
enjoys the reputation of being reason- of Indian units are nearly on par with China 831,619 34%
ably well-managed with several chemi- international standards in most cas- Taiwan 398,289 16%
cals of signifi cant importance in its es. However, the issue happens with
product basket. Amongst these, poly- regard to the price of feedstock for Indian Japan 386,519 16%
vinyl chloride (PVC) resin has a lion’s units, which are high compared to the South Korea 214,453 9%
share with regard to turnover. feedstock price available for most units USA 187,243 8%
abroad. Furthermore, the large scale of Thailand 141,822 6%
The company has stated that one projects abroad enables these overseas Indonesia 67,398 3%
of the reasons leading to the loss in companies to offer prices that are lower Mexico 54,755 2%
Q1FY23 was the excessive dump- than that afforded by Indian units.
ing of PVC (suspension and speciality Vietnam 43,338 2%
paste grades) from China at artifi cially The remedy Others 144,046 6%
low prices. This observation should be To overcome such a scenario, the Total 2,469,482 100%
carefully looked into, and points to the Government of India has the option of Source: Ministry of Commerce, Govt. of India
need for some special measures from imposing anti-dumping duty or safe- Government of India recently opted to
the Government of India to protect the guard duty selectively on the imported impose quantitative restrictions (QRs)
interests of domestic companies and product to protect the interests of the on import of IPA to protect the interest
promote investments. Indian units. However, this is not possi- of the two domestic producers whose
ble in all cases, since domestic consum- total capacity is lower than Indian
Rising imports ers, who procure the imported product demand, necessitating imports.
The import of PVC in India has at lower price than what they have to
been steadily increasing over the last pay the domestic producers, register With QRs in place, Indian produc-
several years, as demand is growing due their protest against these impositions. ers would be enabled to sell their pro-
to its application in multiple, growth- Faced with one such condition, the duction in the domestic market to their
oriented sectors. On the other hand, Table 1: Import and export of PVC in India full capacity level, and consumers will
domestic production has not stepped [Tonnes] import only to the level of demand that
up commensurately, and new projects Imports Exports cannot be met by Indian producers. In
of required capacity are not being set the case of Chemplast, the Q1FY23
up. China has the largest share of PVC 2017-18 1,544,799 2,728 loss would not have happened if the
imports to India, and Indian produ- 2018-19 2,006,414 1,734 Government of India had imposed sim-
cers, including Chemplast Sanmar, 2019-20 2,054,931 2,336 ilar QR on import of PVC. Generally
have been forced to suffer losses due to speaking, the imposition of QRs on im-
lack of price competitiveness with im- 2020-21 1,595,101 75,469 ports to protect the interest of domestic
ported material from China. 2021-22 1,671,859 21,717 producers will boost the confi dence of
project promoters to expand capacity.
Such a scenario exists in the case of 2022-23 2,469,480 1,323 This option should be kept including
several other products (e.g., isopropyl Q1 2023-24 660,402 293 when entering into Free Trade Agree-
alcohol, IPA), and discourage Indian Source: Ministry of Commerce, Govt. of India ments (FTAs).

Chemical Weekly September 19, 2023 185

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