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Why does India import garbage? What is the anti-dumping duty imposed on bottle grade PET from China?

With India’s growing self-sufficiency objective and anti-China sentiments after the latest clash between the two neighbours at the Line of Actual Control (LAC), there have been attempts to reduce the country’s dependency on the world’s leading manufacturer. However, as has been mentioned time and again, India’s numerous growing industries, including automobile and tech industry, relies heavily on the imports from China for raw materials and the country, at this point, is not potent enough to do without them. However, the story behind PET bottles is a little more complicated than the title reveals. To begin with, let’s understand what PET is.
What is PET?
PET, which stands for polyethylene terephthalate, is a form of polyester, just like the clothing fabric. It is extruded or moulded into plastic bottles and containers for packaging foods and beverages, personal care products, and many other consumer products. More generally, another form of plastic in the already garbage-riddled country.
Why are we importing this new form of plastic?
Well, legally we shouldn’t but thanks to loopholes in the country, we have found a way out. The thing about PET or plastic waste, in general, is that it is terribly difficult to recycle. In an attempt to meet their recycling targets, developed countries dump their plastic wastes into developing countries in the name of PET and plastic waste export. Developing countries, in turn, use it as a source of revenue.
But, is it good for the importing country? What does it do with the imported garbage?
All this is far and healthy as long as the developing country can manage to recycle the imported plastic, but so isn’t generally the case, especially for India. Being one of the biggest contributors of non-biodegradable waste globally, India has been able to recycle and reuse only about half of the plastic waste in the past few years, leaving the leftover dumped on water bodies, streets and waste dumps. The situation worsened after China imposed import ban on PET and other recyclable plastic scrap, making India emerge as one of the largest plastic scrap importers. Thus, keeping in view the country’s inability to process all of tons of plastic entering the country, the Ministry of Environment, Forest and Climate change imposed a ban on plastic imports, especially PET bottles, in early 2015. However, a subsequent amendment in 2016 allowed agencies located in Special Economic Zones (SEZs) to import plastic waste. Reports claimed that this is the loophole that has allowed plastic imports to increase. When we say increased imports, we mean the fact that India’s imports of plastic scraps from China, Japan, Italy and Malawi for recycling and imports of PET bottle scrap and flakes quadrupled in the years after the amendment. An organisation called the Pandit Deendayal Upadhyay Smriti Manch says that in the fiscal year 2016-17, the imports were 12,000 tonnes. This figure grew to 48,000 tonnes in FY 2017-18. The organisation also claims that India had imported 25,000 million tonnes (MT) in the first three months of FY 2018-19. The number has only grown since, with the current statistics showing a 67 per cent increase, from 88,247 metric tonne in FY18 to 1,47,601 MT in FY19, in imports from China.
How did these surging import demands affect the country?
This substantial increase called in for speculations from the finance ministry, calling in the Chinese exports of PET bottles to be priced below fair market value, leading to the injury to the domestic industry from cheaper imports. It is because it was observed that imports entered the market at a price significantly below the selling price of the domestic industry, thus undercutting the prices of the domestic industry in the market. “It is seen that the market share of subject imports increased considerably over the injury period, while the market share of the petitioning domestic industry fell,” added DGTR.
Even though the importers of the material have so claimed that there is no injury to the domestic market as it is still profitable, the oligopoly market of the product in India dictated a different story. Reliance Industries and IVL Dhunseri Petrochem Industries, two largest producers of the product in India, accounting for over 90 per cent of the domestic production, had applied for the anti-dumping investigation before DGTR, which it initiated in October 2019.
The domestic industry, in its submission to DGTR, said that the imports from China have increased dramatically during the investigation period. “The subject imports are significantly undercutting the prices of the domestic industry. The market share of the domestic industry has fallen from 80 per cent to 64 per cent over the injury period. If dumping is not checked, the price of exports may fall further adversely affecting profitability of domestic industry,” they said. As a result, the Directorate General of Trade Remedies under the Ministry of Commerce suggested an anti-dumping tariff on the bottle grade PET resin from China ranging from USD 60.92 to USD 200.66, depending on the material quality, in an attempt to offset the injury to domestic industry from cheaper imports.
Ministry of Finance, in acceptance of the suggestion recently announced the imposition of anti-dumping duty, saying “imposition of anti-dumping duty is required to offset the injury to the domestic industry caused by the dumped imports of subject goods from the subject country and has recommended imposition of definitive anti-dumping duty on imports of the subject goods, originating in or exported from the subject country and imported into India.” There have, however, been different sides to the story since the importer of raw materials have been adamant on proposing why anti-dumping shouldn’t be imposed. “Large discounts are offered to big companies. This is not available to small and medium units. This price disparity goes against small and medium industries. Hence small and medium industries prefer to import raw materials from China since their pricing policy and terms and conditions of payment are easier,” said Indian Plastic Federation.

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