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Insight | Time: Jun 24 2020 9:58AM
Impact of India to raise trade barriers on polyester products
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Previously, Vietnam initiated anti-dumping investigations on polyester filament yarn originating in China, India, Indonesia and Malaysia; Mexico also launched anti-dumping investigations on polyester yarns originating in China. Recently, India has also begun to set higher trade barriers on Chinese products.

An Indian government official said on June 18 local time that the government is working to reduce dependence on Chinese goods and promote the development of domestic manufacturing industry. Local media reported that India plans to set higher trade barriers and increase import tariffs on imported products valued at US$8 billion to 10 billion from China and other regions. This plan involves about 300 products. Specifically, the Indian government intends to increase import tariffs on 160-200 products, and impose non-tariff barriers on another 100 products, such as license requirements or stricter quality inspections.

The Indian government has pledged to revitalize and protect its manufacturing industry since 2014. The "Made in India" plan and the "India self-reliance" plan have been implemented successively. The first key industries identified at that time included 25 major industries such as automobiles, auto parts, aviation, chemicals, biotechnology, and food processing.

In the fiscal year of 2018/19, China was India’s largest trade deficit country. The bilateral trade volume between China and India was 88 billion US dollars, of which India’s exports to China were only 16.7 billion US dollars, while imports were 70.3 billion US dollars. Trade deficit between Indian and China was 53.5 billion US dollars. According to the latest data, the trade deficit between China and India remains. From April 2019 to February 2020, India’s trade deficit with China was US$46.8 billion.

China was India's second largest trading partner, next to the United States. In terms of categories, India’s main imports from China included bulk medicines, APIs, electronic products, electrical equipment, organic chemicals, plastics and fertilizers. India imported raw material, auxiliary materials and intermediate goods to make its manufactured products competitive in the world.

In 2020, India raised 2 trade barriers to polyester products:
On May 21, 2020, the Ministry of Commerce and Industry of India announced that it had initiated an anti-dumping investigation on polyester yarn originating in China, Indonesia, Nepal and Vietnam. The English name of the product is Polyester Yarn (Polyester Spun Yarn), which mainly involved products under Hs code 55092100. According to customs statistics, under the customs code of 55092100 in 2019, China's polyester single yarn exports to India amounted to 21.1kt, accounting for 9.66% of total exports, ranking third.

On April 15, 2020, the Ministry of Commerce and Industry of India issued an announcement stating that, in response to an application submitted by the Association of Synthetic Fibre Industry, the second anti-dumping sunset review case investigation on all fully drawn or fully oriented yarn/spin draw yarn/flat yarn of polyester originating or imported from China and Thailand was made. The case involved products under Indian Customs Code 5402.47. The dumping investigation period of this case is from January 1, 2019 to December 31, 2019 (12 months), and the damage investigation period is from April 1, 2016 to March 31, 2017, April 1, 2017 to 2018 March 31, 2014, April 1, 2018 to March 31, 2019 and the dumping investigation period. According to customs data, under the customs code of 54024700 in 2019, China's export volume to India was 817 tons with 1,628,180 US dollars, accounting for 0.2% of the total export volume under the tariff code, with little impact.

According to the detailed data of polyester products exported from China to India, the increase in trade barriers will have the greatest impact on PET bottle chip (Hs code at 39076110). The export volume in 2019 was 273kt. India was the first export destination, accounting for 9.4% . Followed by staple fiber (Hs code at 55032000, 55062000) and POY (Hs code at 54024600), the trade volume was 76kt and 31kt respectively. India was the fourth trade exporter for PSF and POY of China, accounting for 7.7% and 5.4% respectively. The next were industrial yarn (Hs code at 54022000) and PET fiber chip (Hs code at 39076910), with trade volumes of 25kt and 26kt respectively. India were the fifth and seventh trade exporter, sharing 5.6% and 4.9%, respectively. The impact on the export of FDY, DTY, textured yarn and other polyester yarns was relatively small.

India has about 10 million tons of polyester capacity, with the filament yarn taking a lion share, followed by PET bottle chip. The proportion of PSF and PET film was relatively smaller. In recent years, its supporting facilities in downstream twisting and fabric manufacturing market are accelerating, which is expected to exert great impact on the polyester industry in China in the future. In 2018-2019, the foreign direct investment of the Indian textile and apparel industry reached US$3.1 billion; according to a research data, the Indian textile industry is expected to approach US$223 billion by 2021; by 2024-25, the exports of textile and apparel industry are expected to be US$300 billion, increasing India’s market share from 5% to 15%.

Polyester products exported from China to India
Polyester products and tariff codes Trade volume (t) Trade value (USD) Proportion Ranking
Industrial yarn 54022000 24741 41004164 5.60% 5
DTY 54023310 3389 6001362 0.30% 39
POY 54024600 30505 30751588 5.40% 4
FDY 54024700 817 1628180 0.20% 33
Textured yarn 54023390 232 646957 0.50% 25
Other polyester yarn 54025200 101 313664 0.50% 25
Total PFY 59785 80345915 2.70% 11
PET bottle chip 39076110 272844 273760708 9.40% 1
PET fiber chip 39076910 26022 26840009 4.90% 7
Staple fiber 55032000+55062000 76237 80586234 7.70% 4
Total polyester products 434888 461532866 6.10% 3

Major products exported to India from China:
According to statistics from the Indian Business Information Agency and the Indian Ministry of Commerce, from January to September 2019, the import and export volume of bilateral goods between India and China was US$65.32 billion, down 3.9%. Among them, India’s exports to China were US$12.60 billion, up 7.3%, accounting for 5.2% of India’s total exports, an increase of 0.4%; India’s imports from China were US$52.72 billion, down 6.3%, taking up 14.3% of India’s total imports, down 0.4%. India's trade deficit was US$40.12 billion, down 9.9%. China was India's largest source of deficit. As of September, China was India’s third-ranked export destination and largest source of imports.

Mineral products were the largest category of products exported by India to China. From January to September 2019, exports were US$3.65 billion, an increase of 2.0%, accounting for 28.9% of India’s total exports to China. Chemical products were the second largest category of commodities exported by India to China, with an export value of 2.85 billion US dollars, up 11.4%, sharing 22.6% of India’s total exports to China. Electromechanical products were the third largest category of goods exported by India to China, with an export value of US$1.15 billion, up 14.8% and occupying 9.2% of India’s total exports to China.

The top three major Indian commodities imported from China were electromechanical products, chemical products and base metals and products. Among them, the import value of mechanical and electrical products was US$26.06 billion, down 9.1%, accounting for 49.4% of India’s total imports from China. The import value of chemical products was US$10.48 billion, up 3.9%, possessing 19.9% of India’s total imports from China. The import value of base metals and products was US$4.08 billion, an increase of 2.8%, sharing 7.7% of India’s total imports from China.
[RISK DISCLAIMER] All opinions, news, analysis, prices or other information contained on this report is provided by analyst of Zhejiang Huarui Information Consulting Co., Ltd (CCFGroup) as general market commentary and does not constitute investment advice. CCFGroup will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
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