Indian print industry braces for impact of anti-dumping duties on plates

The Indian print industry is divided on the issue but many in the sector believe duties on imports can only send prices in one direction.

05 Apr 2012 | By Samir Lukka

The Directorate General of Anti Dumping & Allied Duties (DGAD) has released the preliminary findings on the subject of anti-dumping investigation concerning imports of digital offset plates originating in or exported from China PR and Japan on 16 March, 2012. This will become effective only after the finance ministry issues the customs notification. As one senior print CEO from Kerala said, the findings have "come as no surprise" indicating the mixed response from the industry.

Admittedly, the two camps comprise almost exclusively TechNova on the one side and printers on the other. Whichever side one swears by, the fact is, the authorities have held, "the imports of the dumped product increased by approximately four times between 2007-08 and 2010-11. Import of digital plates from countries other than China, declined to almost nil volume. This was due to price under-cutting by Chinese producers relative to prices charged by non-Chinese exporters to India."

Furthermore, the authorities have validated that "Fujifilm, China, has underpriced their exports by 35%-40%; Kodak, China, by 20%-25% and Lucky Huaguang Graphics, China, by 75%-80% as compared with constructed normal prices."

A divided industry
A few months ago, PrintWeek India hosted a meeting between TechNova management and senior members of the managing committee All India Federation of Master Printers (AIFMP). At that time, Ravindra Joshi was honorary secretary of the AIFMP. He said, "Whether you believe the government's decision to have been the fair conclusion of an independent investigation into Chinese trade practices or grossly unjust protectionism is now a moot point. For the next five years – barring a successful appeal – imports of plates from China will be subject to high anti-dumping duties. This will affect the input costs of print firms."

Although not a novelty from an anti-dumping standpoint, this is the first time that anti-subsidy duties may be imposed in India against Chinese print imports. So what are the implications of this for the Indian print industry? Whether the move could snowball and sour partnerships between manufactures, suppliers and print firms, plus the multitude of associations and federations in this country, is yet to be seen.

When we had spoken to the top management at Kodak India and Fujifilm about anti-dumping, they contested the interpretation of the verdict and surmised, "we want a level playing field for everyone in India". And that if the ruling on 10 April is not favourable, then "all legal options are available."

What Taloja-headquartered TechNova says is, "the authorities have validated that as a result of Chinese dumping, the domestic industry had to reduce its prices, cumulatively, by Rs 46.00 per sq/mtr in 2010-11 as compared with the prices prevailing prior to the commencement of dumping in 2007-08. This has resulted in severe injury and losses for the domestic producer."

Price hikes
Most print firms CEOs we spoke to admitted that although plates represents only 5% of the valuation, the successive rises in the cost of plates mean they are increasingly looking to source at least some of their supplies from China. "But these tariffs diminish the impact of a source of competition that might have caused them to at least think about holding down these increases to some degree in order to remain competitive," says one plate supplier while speaking to us.

CG Ramakrishnan, the chief operating officer of TechNova said, "We fully intend to honour our historical policy of passing-on only the cost increases as evidenced by the published LME prices, forex rates and other key input costs. Therefore, except for these cost related factors, which can go in either direction, the prices of domestic digital plates will remain unchanged."

Having admitted this argument, the anti-dumping duty could have several negative impacts on the Indian print market and prices may be "driven artificially higher", which would further exacerbate cost increases faced by print firms.

Ravi Kapoor of RKL Printers said, "As you may be aware the local paper manufacturer in India filed the petition in DGAD to impose anti-dumping duty on paper and after thorough investigation it was rejected. My point is, if imports from China and Japan are not restricted but if the anti dumping is levied the imports would become expensive as such the imported plates sold in India are at least 10%-12% higher than the local manufacturer and also the domestic manufacturer does not pay the additional cost like loading, customs duty, special additional duty, freight etc which gives the clear price advantage of over 15%. Like any prudent local manufacturer has to only price his product just 2 to 3% less than the above landing cost to control the market and have absolute monopoly. The Indian printer is therefore made to pay more for the goods if the anti dumping duty is levied or otherwise the advantage shifts to the local manufacturer at the cost of the local printers who thereby lose the advantage of being competitive in the international market.

When we posed this query to C G Ramakrishnan of TechNova, his response was, "Prices of imported plates being 10-12% higher than domestic manufacturer as mentioned is not correct at all. The imported plates are undercutting and underselling the domestic manufacturers’ price by leveraging the benefits given in China. That is why the local manufacturer is affected and injured."

If any outcome is certain, it’s that the DGAD will have a public hearing on 10 April. This has been hearing is part of a nine month process in which the views of all stake-holders have been heard and verified. Hopefully, the investigation and its findings will provide clarity to the Indian print sector which badly needs it.

For any Indian printer that has attempted to reduce costs by buying plates from China, the impact of the anti-dumping tax could be quite substantial and the extra squeeze on cashflow could prove terminal.

On the other hand as Pranav Parikh, chairman and managing director of TechNova said, "If TechNova’s digital plate business becomes unviable, it will impact TechNova’s other businesses as well. We’re not putting a hypothetical question as during the years 2008-09, we had a real reason to close down. I must tell you that the last three years of the 40 years that we have been in existence, have been the most strenuous. When we were small, we had a smaller investment but in the last 40 years TechNova has ploughed it all back. Since 1971, when we opened in Mahalaxmi compared to 1981 when we moved to Taloja for the first PS plate plant and then the first digital plate plant in 2003, at every stage of TechNova’s life cycle, we have invested everything we earned back into the print industry."

PrintWeek India's verdict
We hope an amicable solution is found. If government subsidies and dumping are allowed to undercut fair and competitive prices the system would break down to the disadvantage of all but at the same time we must legally prevent nations with the means and intent to subvert internationally-recognised trade rules.