In addition, the removal of the duty would lead to higher imports, thereby reducing supplier concentration and improving the bargaining power of downstream producers.
The Union government’s decision to withdraw the anti-dumping duty on purified terephthalic acid (PTA) would improve the affordability of man-made textiles, giving it an advantage over cotton. With the abolition of the duty, the PTA spread of Rs 7-Rs 8 per kg (import landed price over domestic) will reduce over the near term, with landed PTA being cheaper by Rs 4-Rs 6 per kg. This would lead to the prices of finished products falling by Rs 3- Rs 5 per kg, which would give a boost to demand, said India Ratings and Research (Ind-Ra), in its study.
In addition, the removal of the duty would lead to higher imports, thereby reducing supplier concentration and improving the bargaining power of downstream producers. Consequently, there would be an improvement in the profitability and credit metrics of sector companies, the study said.
However, the abolition of ADD would adversely impact the profitability of PTA players. There are only four suppliers of PTA in India — Reliance Industries (RIL), MCPI, Indian Oil Corporation (IOCL) and JBF Industries (JBF).
India had imposed ADD of $85-$160 per tonne in 2014, and had extended the same in 2016.