4 Stocks to Benefit after DGTR Targets Chinese Products in Fresh Dumping Probe
Indian manufacturers across pharmaceuticals, chemicals and engineering could see changes in the competitive environment as the government steps up scrutiny of potentially dumped imports. The Directorate General of Trade Remedies (DGTR) has initiated multiple investigations covering products imported from China and other countries. If the probes eventually result in trade remedies, domestic manufacturers could face lower import pressure, making select listed companies relevant for investors tracking this theme.
Fresh Anti-Dumping Probes
An anti-dumping case on seven products from China has been filed by India in reaction to grievances from local manufacturing firms. The products range from pharmaceuticals, chemicals, and engineering products among others, showing that India is now taking seriously allegations of products from China that are negatively impacting the business of local companies.
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The products include Para-tert-octyl phenol formaldehyde tackifier resin, Penicillin G and its salts, 6-amino penicillanic acid (6-APA), t-shaped elevator/lift solid guide rails, amoxycillin trihydrate, montelukast sodium and copolymer polyol.
These products find uses in various industrial sectors. Para-tert-octyl phenol formaldehyde tackifier resin is used in the tire and rubber industry, while Penicillin G, 6-APA, Amoxycillin Trihydrate, and Montelukast Sodium are utilized in the manufacture of medicines as their core components. T-shaped elevator/lift solid guide rails are used in elevators, while Copolymer Polyol is utilized in the production of mattresses.
Potential Benefit for Domestic Players
Domestic producers have sought anti-dumping duties on the ground that the products were being dumped in the Indian market and causing injury to their business interests. The DGTR has launched the investigation on the basis of prima facie evidence found in favor of the complaint.
In case there is any injury to the domestic industries due to dumping of the products, the DGTR may recommend the imposition of anti-dumping duties on the concerned imports. But the final imposition of duties would be decided by the Ministry of Finance.
The anti-dumping duties can be beneficial for the domestic producers in order to create a more equal environment for themselves against low-cost imports.
Pharma and Chemical Imports Under Watch
The cases include various pharmaceutical products, namely Penicillin G, 6-APA, Amoxycillin Trihydrate, and Montelukast Sodium. The DGTR is also probing import of chemicals such as tackifier resin and copolymer polyol from China.
Apart from that, the authority is investigating the dumping of Isopropyl Alcohol (IPA) from the European Union, South Korea, Taiwan, and the United States. Isopropyl alcohol is an ingredient in products like sanitizers. One more case relates to the dumping of Pentaerythritol from Russia, which is used in the paint and varnish industries.
Anti-Circumvention Probe
The trade remedy initiative goes beyond conducting new dumping inquiries. In addition to that, the DGTR has commenced an investigation related to anti-circumvention inquiry into alloy steel chisels and hydraulic rock breakers imported via Malaysia.
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According to DOZCO India, the anti-dumping duties levied on Chinese and South Korean imports are being circumvented via Malaysia. As per the notification, there has been a marked rise in imports via Malaysia following the imposition of the duty in June 2024.
Copper Products Also Under Review
In addition to this, the DGTR has also launched a sunset review in respect of countervailing duty in regard to copper tubes and pipes from Malaysia, Thailand, and Vietnam. Ram Ratna Wires and MetTube Copper India have requested that the existing duties be continued.
All in all, it may be said that the recent developments indicate that India is tightening its grip over the cheap/subsidized importations. This might influence the competition scenario in pharmaceuticals, chemicals, engineering, and copper products.
Aurobindo Pharma
Aurobindo Pharma is a vertically integrated firm that has its business in both APIs and Formulations. The firm has manufacturing units for Penicillin. If there is any intervention in the form of trade remedies to mitigate the Chinese import threat, then Aurobindo can gain a competitive advantage.
Morepen Laboratories
The operations of Morepen Laboratories span APIs, formulations, and healthcare and diagnostics products. The company is one of the largest manufacturers of Montelukast Sodium API. In the event that anti-dumping measures are taken on Chinese imports of Montelukast, then this may have a positive impact on the prices in the domestic market.
Aarti Industries
Aarti Industries is a specialty chemicals manufacturer, catering to the pharma, agrochemicals, polymer, dye, and other sectors. The diversification of its chemical business makes it exposed to the theme of import substitution .
SRF
SRF is a chemicals and materials company operating in sectors including specialty chemicals, fluorochemicals, films and technical textiles. The specialty chemicals division caters to the pharmaceuticals and agrochemical industry. The DGTR measures may prove helpful for the domestic chemical manufacturing industry.