India Implements Quota Restrictions On PVC Suspension Resins Imports To Protect Domestic Producers

To alleviate the challenges faced by domestic producers, the government of India has recently implemented quota restrictions on the imports of polyvinyl chloride (PVC) suspension resins containing more than 2 parts per million of residual vinyl chloride monomer (RVCM). This action comes in response to the increasing dumping of PVC suspension resins from countries such as China, Taiwan, the United States, and Russia, which has caused significant harm to Indian producers. The implementation of these restrictions is expected to safeguard the interests of domestic producers and ensure a fair market environment.

Impact On Domestic Producers

Investigations conducted by the DGTR revealed a substantial and rapid increase in polyvinyl chloride suspension resins imports, particularly between January 2022 and June 2022. Compared to previous fiscal years, import volumes have doubled during this period, indicating a sudden surge in imports. The lower production costs in China, resulting from unforeseen developments, have been attributed to the increase in imports, OfBusiness assessed.

• Business Harm- The decision to impose these quota restrictions stem from the concerns raised by India’s primary PVC Suspension resins producers, namely Chemplast Cuddalore Vinyls Limited and DCW Ltd. They filed a complaint on 15 July 2022, alleging that the surge in imports had severely harmed domestic producers, compelling them to reduce selling prices due to the influx of cheaper imports.

• Selling Price & Inventory- Undercutting prices by imported polyvinyl chloride suspension resins has put pressure on the domestic industry’s selling prices. To maintain their customer base, domestic producers have been forced to lower their prices, resulting in declining profits, cash profits, and profits as a percentage of the selling price. Furthermore, the inventories of the domestic industry have increased, highlighting the adverse effects of rising imports.

• Producers Discouragement- An anonymous industry official stated that the rising imports have had a significant negative impact on India’s primary polyvinyl chloride suspension resins producers. With imports already meeting over 55% of India’s PVC demand, further increases would have discouraged domestic producers and contradicted the government’s Make in India initiatives. The official expressed gratitude to the government for imposing quantitative limits on imports, as it would protect domestic producers and maintain a healthy market environment.

What Steps Government Has Taken?

The government notification highlights that the imposition of import quotas on PVC Suspension resins is deemed to be in the best interest of the public. The import restrictions aim to maintain a balance between domestic production and imports, thereby meeting the demand for polyvinyl chloride suspension resins. These safeguard measures have the objective of protecting the domestic industry from significant harm while ensuring a manageable impact on the downstream sector:

• Quarter Wise Restrictions- Under the guidance of the Directorate General of Trade Remedies (DGTR), the Ministry of Commerce and Industry has introduced quarter-wise quantitative restrictions on polyvinyl chloride suspension resins from major countries. The first quarter, spanning from April 2023 to June 2023, has a fixed import quota of 54,203 tons, followed by quotas of 54,920 tons, 55,646 tons, and 56,382 tons for the second, third, and fourth quarters, respectively.

• Individual Import Quotas- Individual import quotas have been specified for each quarter from China, Taiwan, the United States, and Russia. China, for example, has an import quota of 20,494 tons for the first quarter, gradually increasing to 21,317 tons in the fourth quarter. Similar separate quotas have been assigned for imports from other countries as well.

OFB’s Insight

The imposition of quota restrictions on PVC Suspension resins imports by the government of India serves as a significant relief for domestic producers. By curbing the dumping of these resins, primarily from various countries, the government aims to protect the interests of domestic producers and promote a fair market environment. The specified import quotas for each quarter and country reflect the government’s commitment to balance the demand for polyvinyl chloride suspension resins while safeguarding domestic production.

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