The Union commerce ministry has recommended the imposition of anti-dumping duty on ofloxacin and its intermediates—ofloxacin acid (O-Acid) and ofloxacin ester (O-Ester)-imported from China with an aim to provide a level playing field for domestic industry vis-a-vis foreign manufacturers and exporters.

O-Ester is the penultimate stage in the production of O-Aid. The process from the stage of O-Ester to O-Acid is an incremental process.

O-Ester is hydrolyzed in acidic water, which is then cooled and filtered to form fried cakes of O-Acid, which are then further processed to obtain ofloxacin.

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Ofloxacin is used to treat certain infections, including bronchitis, pneumonia, and infection of the skin, bladder, urinary tract, reproductive organs, and prostate.

Ofloxacin is in a class of antibiotics called fluoroquinolones and works by killing bacteria that cause infections. Ofloxacin-acid has dedicated use in the production of ofloxacin.

O-Acid is dedicated to the production of ofloxacin and has no other usage. The market remains the same for both O-Acid and ofloxacin. Currently, no anti-dumping duties are in force on ofloxacin and its intermediates.

Ofloxacin, O-Acid, and o-Ester are not substitutes for each other. There are more than 700 customers of ofloxacin in India.

The Directorate General of Trade Remedies (DGTR) had earlier recommended anti-dumping duties on imports of ofloxacin imported from China through a notification dated December 22, 2017, for a period of three years and the union ministry of finance imposed the anti-dumping duty on import of ofloxacin from China on March 15, 2018.

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The duties were in force till March 14, 2021.  Anti-dumping duties were also recommended on imports of O-Acid from China by the DGTR on December 19, 2019.

The finance ministry imposed the duties on imports of O-Acid from China through a notification dated March 12, 2018, for a period of three years.

Imposition of duties on O-Acid led to circumvention by the producers by way of imports of O-Ester, a penultimate stage product.

Thus, the DGTR undertook an anticircumvention investigation and recommended the extension of duties to O-Ester vide notification dated October 24, 2018, and the finance ministry extended the duties vide notification dated November 15, 2018.

Aarti Drugs Limited filed an application before the ministry's investigation arm DGTR seeking an anti-dumping probe concerning imports of ofloxacin and its intermediates from China.

The applicant alleged that the dumping of the chemical has increased after the expiry of anti-dumping duty which has affected the domestic industry.

Considering the past practice of circumvention, the applicant has combined O-Acid and O-Ester also in the product scope.

Duties earlier levied on O-Acid were circumvented by imports of O-Ester which had not been a traded product until then.

The authority, on the basis of prima facie evidence submitted by the applicant, on September 17, 2021, initiated an investigation to determine the existence, degree, and effect of the alleged dumping of ofloxacin and its intermediates from China and to recommend an amount of anti-dumping duty, which if levied, would be adequate to remove the alleged injury to the domestic industry.

The directorate conducted an investigation from April 1, 2020, to March 31, 2021.

The examination of trends in the context of injury analysis covered the periods from April 2017 to March 2020 and the period of investigation.

The directorate stated that the domestic industry is suffering low-capacity utilization and losses on account of the import of the product from China.

“The domestic industry has suffered material injury due to increase in imports in the period of investigation as compared to the previous year with cessation of duties on O-Acid."

"The imports have increased with the cessation of duties on O-Acid. The volume of imports has switched between O-Acid, O-Ester, and ofloxacin depending on the presence or absence of anti-dumping duty,” said DGTR in its findings.

“The imports are priced below the target prices of the domestic industry leading to price suppression."

"The domestic industry has not been able to produce the product to the extent it could have produced."

"Further, despite significant demand for the product in the country, the domestic industry has not been able to sell even to the limited extent it has produced and has been faced with significant inventories."

"The domestic industry is suffering significant financial losses and a negative return on investment,” the directorate added.

With an aim to protect domestic industry, DGTR has recommended the imposition of anti-dumping duty on the import of products from China. The recommended duty ranges between USD 0.53 per kg and USD 7.03 per kg.

The final decision on imposing the duty will be taken by the finance ministry. The aim of duty is to ensure fair trade practices and create a level-playing field for domestic industry against foreign manufacturers and exporters.

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