No anti-dumping duty on Saudi players to hurt RIL

Mumbai: Reliance Industries (RIL), India's biggest petrochemicals producer, will feel the heat of Indian government decision to lift a 6.5% anti-dumping duty imposed against Saudi Basic Industries Corp (SABIC), world's largest petrochemicals producer, and other producers from the Saudi Kingdom. 

    Central Board of Direct Taxes on December 30 said in its website that the change is effective from the day the notification is published in the Gazette of India, without assigning any reason for scrapping the duty. A 6.5% anti dumping duty was imposed in November 2010 following a request of imposition of restrictive duty from RIL, which has over 70% market share in India's growing polypropylene market. The duty covered imports from leading Saudi firms like SABIC, Advanced Petrochemicals and National Industralization Co (NIC). 
    The duty was imposed on Saudi Arabia, Oman and Singapore the grounds that the import shipments were valued at less than normal prices and were hurting domestic manufacturers. However, the duty has been removed on imports of polypropylene only from Saudi Arabia. 
    "India has bowed to Saudi pressure and its decision to lift restrictive duties will hurt RIL. The duty was not imposed because of request from petrochemical association or a trade body. It was imposed because of hectic lobbying from RIL, which commands Indian petrochemicals market," said a petrochemical expert based in Dubai, adding that the announcement came just before the visit of the Saudi minister of commerce and industry Tawfiq Al-Rabiah to New Delhi, implying that it's more of a political move than a business decision. 
    A RIL senior official confirmed the move but declined to give specific impact upon the firm as he was not authorized to speak to media. A query sent to RIL last week failed to elicit a response. 
    While Saudi's petrochemicals majors have started exploring the option of sending shipments to India, RIL is gearing itself for mega play in the sector. The company has lined up massive $12 billion (Rs 63,000 crore) of investments for the petrochemicals sector to be invested in the next few years. This will further consolidate RIL's position in Indian and global petrochemical player. 
    "RIL is a low cost petrochemical producer but it cannot compete with global leaders like SABIC because of the feedstock. In Saudi gas prices are 50 cents compared to $4.2 in India. RIL do not gets gas and uses naphtha as feedstock for petrochemicals. This is inspite of being countries leading gas producer in KG basin," said an analyst based in Mumbai. 
    RIL shares lost a little over 1% to close at Rs 707 on the BSE on Monday.