India has initiated a probe into alleged subsidisation by Indonesia, Malaysia and Thailand on exports of a chemical -- used in making of personal care products such as shampoo, soap and detergents -- which is impacting the domestic industry, according to a notification.

What

  1. Following a complaint by a domestic firm, the commerce ministry's investigation arm Directorate General of Trade Remedies (DGTR) has started the probe to examine whether the subsidy programmes of these countries for exports of saturated fatty alcohols are impacting the domestic industry.
  2. VVF India Ltd has filed an application before the directorate alleging subsidisation of this alcohol from Indonesia, Malaysia and Thailand.
  3. The company has requested for initiation of an anti-subsidy probe for levy of countervailing duties on the imports from these countries.
  4. The company has alleged that producers and exporters of the product in these countries have benefited from subsidies provided by their respective governments at various levels.
  5. In a notification, the directorate said there is prima facie evidence of existence of "countervailable subsidies" on production and/or export of the goods in these countries and such subsidised imports are causing material injury to the domestic industry through their volume and price effects.

Flashback

  1. Under the global trade rules of the World Trade Organization (WTO), a member country is allowed to impose anti-subsidy or countervailing duty if a product is subsidised by the government of its trading partner.
  2. These duties are trade remedies to protect domestic industry. Subsidy on a product makes it competitive in price terms in other markets. Countries provide this to boost their exports.
  3. These three countries are important trading partners of India and they all are members of this Geneva-based multilateral organisation - WTO.