Last Updated on December 31, 2023 by The Health Master
In a bid to provide a level playing field for domestic industry vis-a-vis foreign manufacturers and exporters, the Directorate General of Trade Remedies (DGTR) has recommended imposing an anti-dumping duty on ursodeoxycholic acid, a chemical used in the drug industry, imported from China and South Korea.
Ursodeoxycholic acid is also known as Ursodiol or UDCA. It is used as medical therapy for gallstone disease (cholelithiasis) and biliary sludge. It may be given after bariatric surgery to prevent cholelithiasis.
UDCA is also used as a therapy in primary biliary cholangitis where it can produce an improvement in biomarkers. It is also used to treat primary sclerosing cholangitis. Intrahepatic cholestasis of pregnancy, bile reflux gastritis, etc.
Arch Pharma Labs is the only existing producer of UDCA API in India. Raichem Medicare Private Limited, a joint venture of Shilpa Medicare Limited and ICE S.P.A, Italy manufactures 3A-7B – dihydroxy -5 B-Cholan-24-OIC acid, which is an advanced intermediate of UDCA API.
IOL Chemicals Limited had the plan to produce UDCA on a campaign basis, but their current status is unknown.
Arch Pharma Labs filed an application before the DGTR seeking an anti-dumping probe concerning imports of UDCA from China and South Korea.
The production of the petitioner accounts for the majority i.e., more than 80 percent of the total production in India.
It alleged that the dumping of chemicals has affected the domestic industry. The applicant claimed that its performance has been severely impacted in the form of low production, sales, and cash losses, and a negative return on capital employed.
DGTR on January 24, 2022, initiated an anti-dumping investigation based on the data and information provided by the domestic industry, after prima facie satisfying itself that there is sufficient evidence of the dumping, injury, and the causal link.
The directorate conducted an investigation from October 1, 2020, to September 30, 2021. The examination of trends in the context of injury analysis covered the periods from 2018-19, 2019-20, 2020-21, and the period of investigation.
The DGTR in its preliminary findings on June 30, 2022, observed that the import of UDCA from China and South Korea has increased over the years.
A total of 38,982 kilograms of UDCA have been imported from China and South Korea in 2018-19 followed by 46,320 kgs in 2019-20, 69,720 kgs in 2020-21, and 53,940 kgs during the period of investigation i.e. October 1, 2020, to September 30, 2021.
The directorate stated that the domestic industry is suffering low-capacity utilization and losses on account of the import of the product from China and South Korea.
“The landed price of imports from China and South Korea has declined over the injury period and is much below the cost of sales of the domestic industry.
The domestic industry started production in February 2018. Prior to the commencement of production by the applicant, imports from both countries were priced in the range of USD 330-340 a metric ton.
However, post the commencement of production by the applicant, import prices have started declining and are in the range of USD 210-220 per metric ton.
The low-priced imports have forced the domestic industry to reduce their selling prices in competition to the landed price of the imports.
However, such competition has forced the domestic industry to produce and sell in lower quantities in the market in order to reduce losses,” it stated.
The directorate concluded that though the domestic industry’s inventory level has increased, the performance of the industry has significantly deteriorated in respect of profits, cash profits, and return on capital employed due to the cheap imports.
With an aim to protect the domestic industry, DGTR has recommended the imposition of anti-dumping duty ranging from USD 371.18 per kg to USD 455.01 per kg in its preliminary findings.
While DGTR recommends the duty, the finance ministry takes the final call to impose the same.
The imposition of anti-dumping duty is permissible under the World Trade Organization (WTO) regime. India and China are members of this Geneva-based organization, which deals with global trade norms.
Authority is of the view that imposition of the anti-dumping duty is required to offset the dumping and the consequent injury to the domestic industry.
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