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Detergent Prices to Rise as Chemical Duty Kicks in

Date 13-Apr-2017
Subject Detergent Prices to Rise as Chemical Duty Kicks in

Consumers are staring at a second hike in prices of detergents within a fortnight, with the government slapping an anti-dumping duty on a key input in manufacturing detergents.

While the first price hike, at the start of the 2017-18 financial year, was done in anticipation of the Goods and Services Tax (GST), the second one will be on account of the duty imposed on linear alkyl benzene (LAB).

On Monday, LAB, a chemical that constitutes 70 per cent of a detergent, was slapped with a $50 to $300 a tonne anti-dumping duty on imports from Iran, Qatar and China. In percentage terms, this works out to a five to 27 per cent duty slap on the price of LAB, currently imported at $1,100 a tonne.
Conversations with multiple detergent makers reveal that a price hike of about four to five per cent is in the offing, coming just after the April 1 round of a similar hike.

“This matter (slapping an anti-dumping duty) has been rushed through without fully taking into account our point of view," said Sanjay Trivedi, director, Indian Home & Personal Care Industry Association (IHPCIA), the apex body consisting of the country's top detergent makers, such as Hindustan Unilever, Procter & Gamble, and Ghari. “We are looking at all options, including appealing against the move in court,” he added.

According to Trivedi, importing LAB is a necessity for detergent makers as there is a shortfall in supply of the input to the tune of 15,000 tonnes a month. “Demand of LAB is 55,000 tonnes a month. Domestic LAB manufacturers make only 40,000 tonnes a month. Detergent makers are left with no option but to import to bridge the shortfall,” he said.

The decision to slap the anti-dumping duty was pressed by domestic LAB makers Nirma and Tamil Nadu Petroproducts. Apart from the two, which have 16 per cent each of the domestic LAB market, there are two other LAB makers — Indian Oil Corporation and Reliance Industries — which control a significant share of the market.

In its final findings on March 6, the Directorate General of Anti-Dumping and Allied Duties, which functions under the commerce ministry, concluded that there was dumping of the chemical from these three nations and that this was undercutting and suppressing prices of domestic players.

“The authority considers it necessary to recommend a definitive anti-dumping duty on imports of the chemical from China, Iran and Qatar,” it said in its findings.
While the IHPCIA did write to the ministry of commerce asking for the final findings to be withdrawn, the duty was eventually slapped. This has come, say sources, a week before a crucial hearing on a writ petition filed in the Delhi High Court by Hindustan Unilever, the country’s largest detergent maker, in the matter.


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