DGTR Imposes Safeguard Measures Against Ferro Molybdenum Imports

In a case brought before the Director General of Trade Remedies, the Indian Ferro Alloy Producers Association, along with Premier Alloys & Chemicals Private
Ferro Molybdenum
Ferro MolybdenumImage Source – Singhania International

In a case brought before the Director General of Trade Remedies, the Indian Ferro Alloy Producers Association, along with Premier Alloys & Chemicals Private Limited, Boon Metal & Alloy Corporation, and Team Ferro Alloys Private Limited, sought bilateral safeguard measures against the increased imports of Ferro Molybdenum from the Republic of Korea. This application was filed in accordance with the Comprehensive Economic Cooperation Agreement (CEPA) between India and South Korea and the Bilateral Safeguard Measures Rules of 2017.

Based on initial evidence, the Director General initiated an investigation to determine whether the imports of Ferro Molybdenum could be classified as "increased imports" and whether they had caused injury to the domestic industry. The investigation aimed to establish if bilateral safeguard measures were necessary and, if so, their duration. The findings of the investigation were published in a notification issued on September 30, 2022.

After careful examination, the Director General made several observations. Firstly, there was no discernible difference between the subject goods produced by the applicants and those imported from South Korea. Furthermore, no evidence was presented to substantiate claims of superior quality or purity of the Korean imports compared to the Indian industry's products. The application was supported by producers accounting for 40% of total production, while an additional 20% share was represented by supporters.

The investigation revealed a significant increase in the imports of Ferro Molybdenum, both in absolute terms and in relation to Indian production and total imports. This increase coincided with the elimination of duties and persisted even in the most recent period. The Director General concluded that the increased imports were a direct result of tariff concessions, and no justifiable reasons were provided by the interested parties to explain this surge.

The Indian industry was found to possess sufficient capacity to meet the domestic demand, although it operated at low capacity utilization. Despite the increased demand, the applicants were unable to increase their domestic sales proportionally. Consequently, the imports took away market share from the applicants, leading to declines in volume parameters such as market share and sales. The applicants were forced to reduce their production, and their profitability suffered as a result.

Based on these findings, the Director General recommended the implementation of bilateral safeguard measures in accordance with the India-Korea Comprehensive Economic Partnership Agreement (Bilateral Safeguard Measures) Rules of 2017. The recommended measure includes an increase in the customs duty rate on imports of Ferro Molybdenum originating from South Korea. The recommended duty rate is to be set at the lower of the Most Favoured Nation applied rate on either the date of application of the safeguard measure or the day preceding the entry into force of the India-Korea CEPA. The recommended measure is suggested for a two-year period, with a gradual reduction in the duty rate during the second year.

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