Policy

‘Anti-subsidy duty’ on fibreboard coming

K.R.Srivats New Delhi | Updated on May 04, 2021

Fibreboards from Indonesia, Malaysia, among others, may come under the tax levy

Indian industry suffered material injury due to imports, DGTR findings show

The Directorate General of Trade Remedies (DGTR) in the Commerce Ministry has recommended levy of countervailing duty or anti-subsidy duty on imports of “fibreboards” from Indonesia, Malaysia, Thailand, Vietnam and Sri Lanka.

Fibreboards’ subsidisation

In its final findings on the anti-subsidy investigation concerning imports of fibreboards from these countries, the DGTR has concluded that the domestic industry had suffered material injury due to subsidisation of fibreboards by the governments of these countries and that the subsidy margins of each of the countries is above the “de-minimus and significant”.

The DGTR has therefore recommended anti-subsidy duty for a period of five years. Greenply Industries Ltd/Green panel Industries Ltd, Century Ply Boards (India) Ltd and Rushil Decore Ltd had filed an application on behalf of the domestic industry before the DGTR seeking levy on this imports.

Plain MDF Board or fibreboard is a composite wood product made out of wood waste fibres glued together with urea formaldehyde resin or melamine resin by applying heat and pressure. It is widely used for partitions, modular furniture and cabinets due to its smooth and uniform finish.

The actual anti-subsidy duty that would be levied would depend on whether the finance ministry is going ahead with the earlier recommendation of the DGTR to impose anti-dumping duty on plain medium density fibreboard or not. The DGTR has now recommended anti-subsidy duty that ranged from ‘Nil’ to 27.52 per cent of CIF value. If anti-dumping duty is imposed, then that amount will be deducted from the anti-subsidy duty.

Sanjay Agarwal, Managing Director, Century Ply told BusinessLine that the Medium-density fibreboard (MDF), particle board or fibreboard industry is in a very nascent stage in India.This industry has reached a mature stage in Australia, New Zealand, Malaysia, Thailand, Vietnam, China and Sri Lanka long back, he said. “The local government have helped them through enormous plantation of fast growing trees. All these countries are large exporters of Fibreboards to the world including to India,” Agarwal said.

Agarwal said that India imported about 20-25 per cent of its requirements from these countries till Covid-19 struck. He said that the Indian firewood industry faces many challenges and is trying to survive in a highly competitive scenario. “It’s a very capital intensive industry and the investment to turnover ratio is usually 1:1,” he said, adding that interest cost in India is much higher than the countries producing MDF.

The second reason is the higher cost of wood in India due to low plantation and land availability. “These two factors make our industry less competitive at the international stage,” he said.

Given that few countries also provide subsidy to their MDF industry, the DGTR has now proposed countervailing duty to compensate for the subsidy provided by the foreign countries.

Published on May 04, 2021

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