Council Regulation (EC) No 713/2005 of 10 May 2005 imposing a definitive countervailing duty on imports of certain broad spectrum antibiotics originating in India

• (113) Firstly, the preferential interest rates of an ECS credit set by the RBI Master Circulars mentioned in recital 107 can decrease interest costs of an exporter as compared with credit costs purely set by market conditions and confer in this case a benefit in the meaning of Article 2(2) of the basic Regulation on such exporter. Only in the case of those cooperating exporters, where such rate differences were found to exist, was it concluded that a benefit was conferred. Contrary to the submissions set out above, those rate differences cannot be explained by pure market behaviour of the commercial banks. Export financing is not per se more secure than domestic financing. In fact, it is usually perceived as being more risky and the extent of security required for a certain credit, regardless of the finance object, is a purely commercial decision of a given commercial bank. Rate differences with regard to different banks are the result of the methodology of the RBI to set maximum lending rates for each commercial bank individually. In addition, but for the RBI Master Circulars, commercial banks would not be obliged to pass through to borrowers of export financing any perhaps more advantageous interest rates for export credits in foreign currency. Summarizing the response to those submissions, it should be recalled that the objective of the RBI Master Circulars is to provide export financing at ‘internationally competitive rates’ and the RBI itself considers export credit rates as ‘concessive’. Secondly, and despite the fact that the preferential credits under the ECS are granted by commercial banks, this benefit is a financial contribution by a government in the meaning of Article 2(1)(iv) of the basic Regulation. In this context, it should be noted that neither Article 2(1)(iv) of the basic Regulation nor the ASCM require a charge on the public accounts, e.g. reimbursement of the commercial banks by the GOI, to establish a subsidy, but only government direction to carry out functions illustrated in points (i), (ii) or (iii) of Article 2(1) of the basic Regulation. The RBI is a public body and falls therefore under the definition of a ‘government’ as set out in Article 1(3) of the basic Regulation. It is 100 % government-owned, pursues public policy objectives, e.g. monetary policy, and its management is appointed by the GOI. The RBI directs private bodies, since the commercial banks are bound by the conditions, inter alia, the maximum ceilings for interest rates on export credits mandated in the RBI Master Circulars and the RBI provisions that commercial banks have to provide a certain amount of their net bank credit towards export finance. This direction obliges commercial banks to carry out functions mentioned in Article 2(1)(a)(i) of the basic Regulation, in this case loans in the form of preferential export financing. Such direct transfer of funds in the form of loans under certain conditions would normally be vested in the government, and the practice, in no real sense, differs from practices normally followed by governments, Article 2(1)(a)(iv) of the basic Regulation. This subsidy is deemed to be specific and countervailable since the preferential interest rates are only available in relation to the financing of export transactions and are therefore contingent upon export performance, Article 3(4)(a) of the basic Regulation.

Calculation of the subsidy amount

• (114) The subsidy amount has been calculated on the basis of the difference between the interest paid for export credits used during the review investigation period and the amount that would have been payable if the same interest rates were applicable as for ordinary commercial credits used by the particular company. This subsidy amount (numerator) has been allocated over the total export turnover during the review investigation period as appropriate denumerator in accordance with Article 7(2) of the basic Regulation, because the subsidy is contingent upon export performance and it was not granted by reference to the quantities manufactured, produced, exported or transported. The late claim made by one exporter that the credit amount as verified during the on the spot visit should be reduced by 25 % because it allegedly consisted to this extent of own founds, something not mentioned before or even during the verification visit, has not been substantiated and, therefore, cannot be accepted. As far as the claim is concerned to use with regard to the lending banks new information instead of the information provided during the verification visit this has also to be refuted, because such information was not made available in good time and not subject to verification. In any event, this exporter has not substantiated its claim that it only obtained export financing by the commercial banks with the most favourable conditions. Six companies availed of benefits under the ECS. They obtained subsidies of up to 2,3 %.

Income Tax SchemesExport Income Tax Exemption Scheme (EITES)Section 80HHC of the Income Tax Act 1961 (ITA)

• (115) It was established that four of the investigated exporters received the benefit of a partial income tax exemption on profits derived from export sales during the review investigation period. The legal basis for this exemption is set by Section 80HHC of the ITA.

• (116) This provision of the ITA was abolished for the assessment year 2005 to 2006 (i.e. for the financial year from 1 April 2004 to 31 March 2005) onwards. Consequently, 80HHC of the ITA will not confer any benefits on the applicant after 31 March 2004. While four of the investigated exporters benefited from this scheme in the review investigation period, insofar as the scheme has since been withdrawn, it shall therefore not be countervailed, in accordance with Article 15(1) of the basic Regulation.

Sections 10A and 10B of the ITA

• (117) The full income tax exemption on profits derived from export sales of a newly established undertaking in a SEZ, a free trade zone, an electronic hardware technology park or a software technology park (section 10A ITA) or a newly established EOU (section 10B ITA) during the first 10 years of production continues to be in force till 31 March 2010.

• (118) One company availed during the past 10 years of benefits under section 10B ITA, starting in the financial year 1993 to 1994. For this reason, this company will no longer be eligible for benefits under section 10B ITA from the financial year 2003 to 2004 onwards. Therefore, in accordance with Article 15(1) of the basic Regulation, this scheme shall not be countervailed in the present case.

Income Tax Incentive for Research and Development (ITIRAD)Legal basis

• (119) The detailed description of the ITIRAD is set out in section 35(2AB) of the ITA.

Eligibility

• (120) Companies engaged in the business of bio-technology or manufacturing of drugs, pharmaceuticals, chemicals, electronic equipment, computers and computer software, telecommunication equipments, helicopters, aircrafts or any other article or thing as may be notified are eligible for benefits under this scheme.

Practical implementation

• (121) For any expenditure (other than cost of land or building) on in-house research and development facilities as approved by the Department of Scientific and Industrial Research of the GOI, a deduction of a sum equal to 150 % of the costs de facto incurred is permitted for income tax purposes. Thus, by means of a 50 % deduction of fictional expenses (i.e. expenses not actually incurred), the income tax base and subsequently the income tax burden decreases artificially.

Disclosure comments

• (122) Upon disclosure one exporter, which received benefits under this scheme, made the following submissions. This scheme should not be countervailed, because (i) albeit ITIRAD being indeed limited to certain sectors it is claimed to be not specific in the meaning of Article 3(2) of the basic Regulation, since all enterprises in those sectors are eligible and (ii) expenditure which is incurred after 31 March 2005 will, according to section 35(2AB) subsection (5)ITA, not benefit from this scheme.

Conclusion on ITIRAD

• (123) The ITIRAD provides subsidies within the meaning of Article 2(1)(a)(ii) and Article 2(2) of the basic Regulation. The artificial income tax base reduction under section 35(2AB) of the ITA constitutes a financial contribution by the GOI, since this decreases the GOI’s income tax revenue which would be otherwise due. In addition, the income tax reduction confers a benefit upon the company, because it improves its liquidity.

• (124) The GOI argued and reiterated upon disclosure without substantiating it, that eligibility for ITIRAD is based on objective criteria and thus the scheme is not specific. However, the clear wording of section 35(2AB) ITA proves that ITIRAD is de jure specific in the meaning of Article 3(2)(a) of the basic Regulation and therefore countervailable. Eligibility for this scheme is not governed by objective criteria, which are neutral in the meaning of Article 3(2)(b) of the basic Regulation. Benefits under this scheme are only available to certain industrial sectors listed under recital 120; the GOI has not made this scheme available to all sectors. Contrary to the submission made by one exporter, such limitation constitutes specificity, since the category ‘group of industries’ in Article 3(2) of the basic Regulation synonymously describes sector restrictions. This restriction is not economic in nature and horizontal in application such as number of employees or size of enterprise.

• (125) In addition, the claim that expenditure incurred after 31 March 2005 is exempt from the scheme does not lead to its non-countervailability in the meaning of Article 15(1) of the basic Regulation. It has not been demonstrated that this scheme was already withdrawn at the moment of finalizing the findings of the review investigation, nor that the exporter will no longer obtain benefits from ITIRAD. To the contrary, ITIRAD is in force for the whole assessment year 2005/2006 (i.e. the financial year 2004/2005), can thus continue conferring further benefits. In addition, the exporter has not substantiated its claim, that no prolongation of this scheme is foreseen by the GOI. In fact, the scheme has already been prolonged in the past ([^E0008]). There is no indication that such prolongation will not take place with a future Finance Act, in particular since the GOI neither in the consultation nor in its disclosure comments gave any indication that as of 31 March 2005 the scheme will (i) expire and (ii) not be substituted by a comparable income tax relief provision.

Calculation of the subsidy amount

• (126) The subsidy amount has been calculated on the basis of the difference between the income tax due for the review investigation period with and without the application of the provision of section 35(2AB) of the ITA. This subsidy amount (numerator) has been allocated over the total turnover during the review investigation period as appropriate denumerator in accordance with Article 7(2) of the basic Regulation, because this subsidy relates to all sales, domestic and export, and it was not granted by reference to the quantities manufactured, produced, exported or transported. A subsidy margin of 1,5 % was so established for one company which received benefits under the ITIRAD.

Regional SchemesIndustrial Incentive Schemes (IIS) of the Governments of Gujarat and Punjab

• (127) The States of Gujarat and Punjab grant to eligible industrial enterprises, incentives in the form of exemption and/or deferment of sales and purchase tax in order to encourage the industrial development of economically backward areas within these States. Since these schemes are virtually identical, they are assessed jointly.

Legal basis

• (128) The detailed description of these schemes as applied by the Government of Gujarat (GOG) and the Government of Punjab (GOP) is set out in GOG Resolution No INC-1090-1023-(2)-I(GR No 2) of 16 October 1990 and in GOP Resolution No 15/43/96-5IB/2238 of 20 March 1996 respectively.

Eligibility

• (129) Companies setting up a new industrial establishment or making a large-scale expansion of an existing industrial establishment in backward areas are eligible to avail of benefits under these schemes. Nevertheless, exhaustive lists of ineligible industries exist that prevent companies in certain fields of operations from benefiting from the incentives.

Practical implementation

• (130) Under these schemes, companies must invest in backward areas. These areas, which represent certain territorial units in the two States are classified according to their economic development into different categories while at the same time there are areas excluded or ‘banned’ from the application of the incentive schemes. The main criteria to establish the amount of the incentives are the size of the investment and the area in which the enterprise is or will be located.

• (131) Incentives can be granted at any point in time since there are no time limits either in the filing of an application for the incentives or in the fulfilment of the quantitative criteria.

Disclosure comments

• (132) Upon disclosure two exporters, which received benefits under the IIS, made the submission (i) that the IIS is not an export subsidy, (ii) constitutes only a compensation for extra expenses incurred on account of non-availability of appropriate infrastructure in the designated backward areas and (iii) in the case of one exporter that it did no longer benefit from the scheme since 5 July 2003.

Conclusion on IIS

• (133) These schemes provide subsidies within the meaning of Articles 2(1)(a)(ii) and 2(2) of the basic Regulation. They constitute a financial contribution by the GOG and the GOP respectively, since the incentives granted, in the present case sales and purchase tax exemptions, decrease tax revenue which would be otherwise due. In addition, these incentives confer a benefit upon a company, because they improve its financial situation since taxes otherwise due are not paid.

• (134) Furthermore, the schemes are regionally specific in the meaning of Articles 3(2)(a) and 3(3) of the basic Regulation since they are only available to certain companies having invested within certain designated geographical areas within the jurisdiction of the States concerned. They are not available to companies located outside these areas and, in addition, the level of benefit is differentiated according to the area concerned.

• (135) The GOI does not share this assessment. Firstly, it argued that international trade is per se not subject to sales tax, as already stipulated by the Indian Constitution. As a result, the GOI continued, such schemes cause no revenue forgone otherwise due in respect of export transactions and should consequently not be countervailed. However, and contrary to the disclosure submissions by two exporters in this respect as well, the scheme was not assessed as an export subsidy, within the meaning of Article 3(4)(a) of the basic Regulation, with a direct focus on exports of the product concerned, but as otherwise specific (see recital 134). A direct link between the subsidy and the exported product is not required to render a subsidy scheme countervailable. In accordance with Article 1(1) of the basic Regulation, it is sufficient to establish a direct link between the subsidy and the manufacturing company. On the basis that ‘money is fungible’ every kind of such domestic subsidy will be, via lower prices, reflected in export transactions as well, because such subsidy improved the overall liquidity of a company. In addition, the GOI has provided no evidence that the general sales tax exemption for export sales covers purchase tax liabilities on input materials as well. In fact, in the present case, the companies have also used the IIS to offset purchase tax liabilities.

• (136) The GOI further contended that the IIS, although admittedly limited to certain backward regions within the territories of Punjab and Gujarat, should not be considered as specific, because they allegedly do not favour certain enterprises within these specially designated regions. However, the GOI admitted that not all kinds of production within those designated territories are eligible for the IIS. In fact, a regional restriction of a state subsidy scheme to all enterprises in specially designated areas within its territory by itself constitutes specificity. This kind of scheme clearly favour certain enterprises over others, because a company in an eligible region can obtain aid while its competitor located in a non-eligible region can not. Such a differentiation is not objective within the meaning of Article 3(2)(b) of the basic Regulation and therefore specific, since the schemes are not horizontally applied all over the State territory.

• (137) An alleged compensation via the IIS for extra costs incurred due to insufficient infrastructure does not, contrary to the submission made by one exporter, change the evaluation as a countervailable subsidy. Such alleged costs have not been substantiated.

• (138) The exporter, which claimed no longer to be eligible for benefits under the IIS, has not substantiated this allegation, e.g. by providing a confirmation of the GOG. To the contrary, it stated in its management reports for 2002 to 2003 (i.e. the review investigation period) that it was seeking extension of the IIS benefits until 2012. It should be noted, that such extension is possible under the IIS of Gujarat. The company has not provided any evidence that the GOG refused this extension.

• (139) The argumentation of the GOI and the disclosure submissions have therefore not changed the assessment of the schemes, sales and purchase tax exemption, being countervailable.

Calculation of the subsidy amount

• (140) The subsidy amount was calculated on the basis of the amount of the sales and purchase tax normally due during the review investigation period but which remained unpaid under these schemes. In accordance with Article 7(2) of the basic Regulation, these amounts of subsidy (numerator) have then been allocated over total sales during the review investigation period as appropriate denominator, because the subsidy is not export contingent and it was not granted by reference to the quantities manufactured, produced, exported or transported. During this period three companies benefited from these schemes. They obtained subsidies of 2,4 % (two companies) and 3,1 %.

Electricity Duty Exemption scheme (EDE) of the Government of Gujarat

• (141) The State of Gujarat grants to eligible industrial enterprises, incentives in the form of exemption from the payment of electricity duty in order to encourage the industrial development of economically backward areas within this State.

Legal basis

• (142) The detailed description of the electricity duty exemption scheme applied by the Government of Gujarat (GOG) is set out in the Bombay Electricity Duty Act of 1958 and in particular in sections 3(2)(vi) and 3(2)(vii)(a) and (b) of this Act, as adapted by the Gujarat Adaptation of Laws Order of 1960.

Eligibility

• (143) Companies investing in backward areas, either by setting up a new industrial establishment or by making a large-scale capital investment in expansion of an existing industrial establishment, are eligible.

Practical implementation

• (144) The scheme is only available to companies having invested within certain designated geographical areas within the jurisdiction of the State of Gujarat. It also empowers the GOG to exclude any areas and any new industrial undertaking from the obligation to pay electricity duty. Furthermore, new industrial undertakings established in specially designated areas are, for a period of five years from the date of commencement of manufacturing, either exempted from the energy duty or levied with the duty at half the normal rate.

Disclosure comments

• (145) Upon disclosure one exporter, which received benefits under this scheme, made the submission that as per 4 June 2004 it allegedly no longer benefited from this scheme. In addition, another exporter claimed not to have used the scheme. However, it should be noted that in respect to this latter exporter this scheme has in any event not been included whilst establishing its subsidy amount.

Conclusion on EDE

• (146) This scheme is a subsidy within the meaning of Articles 2(1)(a)(ii) and 2(2) of the basic Regulation. It constitutes a financial contribution by the GOG, since this incentive decreases the state revenues which would be otherwise due. In addition, it confers a benefit upon the recipient company. The scheme is also regionally specific in the meaning of Articles 3(2)(a) and 3(3) of the basic Regulation since it is only available to companies having invested within certain designated geographical areas within the jurisdiction of the State of Gujarat. Furthermore, criteria and conditions of eligibility governing this incentive are not clearly set out by law, regulation, or other official document. It was confirmed during the verification visits, that one company made use of the scheme for a period of nine years. Although requested to do so, the company did not provide any information other than the Bombay Electricity Duty Act itself, which could have changed this analysis.

• (147) The GOI argued that since the scheme has not been countervailed in another case in 1999, because it was considered horizontal in application within a whole State, it should not be countervailed now. To this end, it has only provided a notification of the GOM Industries, Energy and Labour Department of the State of Maharashtra concerning the Bombay Electricity Duty Act of 1958. However, this information does not concern the State of Gujarat. In addition, it should be noted that according to this notification, the EDE-incentive is apparently not available in all districts/areas of Maharashtra, thus still to be considered regionally specific. It was established that one exporter under investigation, which is situated in Gujarat, used this scheme during the review investigation period. Consequently, it is concluded that this scheme is countervailable for this exporter for the reasons set out in the previous recital.

• (148) The exporter which claimed no longer to be eligible for benefits under the EDE, has not substantiated this allegation, e.g. by providing a confirmation of the GOG. On the contrary, it stated in its management reports for 2002 to 2003 (i.e. the review investigation period) that it was seeking extension of the EDE benefits until 2012, which it already successfully had done in the past for a total of nine years, despite the fact that according to the relevant legislation the exemption period for the EDE should only be five years. The company has not provided any evidence that the GOG refused this extension.

Calculation of the subsidy amount

• (149) The benefit to the exporting producer has been calculated on the basis of the amount of electricity duty normally due during the review investigation period but which remained unpaid under this scheme. In accordance with Article 7(2) of the basic Regulation, the amount of subsidy (numerator) has then been allocated over total sales during the review investigation period (denominator), because it relates to all sales, domestic and export, and it was not granted by reference to the quantities manufactured, produced, exported or transported. A subsidy margin of 0,2 % was so established for one company which received benefits under the EDE.

Package Scheme of Incentives (‘PSI’) of the Government of Maharashtra (GOM)

• (150) It was found that the exporting producers did not obtain any countervailable benefits under the PSI.

Amount of countervailable subsidies

• (151) It has been the consistent practice to consider related companies as one single entity for the determination of a subsidy rate. This is because calculating individual subsidy rates might encourage circumvention of countervailing measures, thus rendering them ineffective, by enabling related producers to channel their exports to the Community through the company with the lowest individual rate. In order to avoid such a situation, an individual subsidy amount per scheme for each related company is first calculated and then a weighted average of these subsidy amounts is established and attributed to each of the related companies.

• (152) Two exporting producers were regarded as related companies and attributed one single subsidy rate, because each of them is operationally in a position to exercise restraint on the other company. According to their Annual Reports, the key management persons of the two companies are relatives and are able to exercise ‘significant influence’ in each other’s company. Significant influence according to Indian accounting standards means the participation in the financial and/or operating decisions of an enterprise. Such influence leads to the qualification as related according to the Indian accounting standards. Furthermore, according to European Customs law parties are deemed to be related when they control each other or are members of the same family ([^E0009]).

• (153) Upon disclosure one of these exporting producers disagreed with the related parties’ analysis as set out above. It alleged without providing further evidence that no business relation between the two companies concerned exists. However, the exporting producer did neither contest the factual description outlined in recital 152 nor substantiated, why, despite these facts, both companies should not be considered as related parties. Consequently, the claim has to be disregarded.

• The amount of countervailable subsidies in accordance with the provisions of the basic Regulation, expressed ad valorem, for the investigated exporting producers ranges between 25,3 and 35,1 %.

• (154) Given the high level of cooperation, the subsidy rate for all non-cooperating companies is set at the level for the company with the highest individual rate, i.e. 35,1 %.

SCHEME →	ALS	DEPBS	EOUS	EPCGS	ECS	ITIRAD	PSI	GIIS	PIIS	EDE	Total
COMPANY ↓	%	%	%	%	%	%	%	%	%	%	%
KDL Biotech Ltd	22,8	4,6	nil	negl.	1,0	nil	nil	nil	nil	nil	28,4
Nectar Lifesciences Ltd	25,8	3,2	nil	negl.	2,3	nil	nil	nil	2,4	nil	33,7
Nestor Pharmaceuticals Ltd	22,0	3,3	nil	nil	negl.	nil	nil	nil	nil	nil	25,3
Orchid Chemicals & Pharmaceuticals Ltd	nil	nil	30,9	nil	1,1	nil	nil	nil	nil	nil	32,0
Ranbaxy Laboratories Ltd	25,6	8,0	nil	negl.	negl.	1,5	nil	nil	nil	nil	35,1
Surya Pharmaceutical Ltd	25,8	3,2	nil	negl.	2,3	nil	nil	nil	2,4	nil	33,7
Torrent Gujarat Biotech Ltd	24,8	nil	nil	nil	nil	nil	nil	3,1	nil	0,2	28,1

LIKELIHOOD OF CONTINUATION OR RECURRENCE OF SUBSIDISATION

• (155) In accordance with Article 18(2) of the basic Regulation, it was examined whether the expiry of the measures in force would be likely to lead to a continuation or recurrence of subsidisation.

• (156) As set out under recitals 21 to 153, it was established that during the review investigation period Indian exporters of the product concerned continued to benefit from countervailable subsidisation by the Indian authorities. In fact, the subsidy margins found during the review are higher than those established during the original investigation, which ranged from 0 to 15,3 % (recital 43 of Council Regulation (EC) No 2164/98). Only the subsidy scheme mentioned under recitals 115 and 116 (80 HHC ITA) has been discontinued, while in some other cases, individual companies have ceased to become eligible for certain schemes. This has already been reflected in the calculation of the subsidy rates. The remaining subsidy schemes concerned give recurring benefits and there is no indication that these programmes will be phased out or modified in the foreseeable future. In the absence of such action, the exporters of the product in question will continue to receive countervailable subsidies. Each exporter is eligible for several of the subsidy programmes. In these circumstances, it was considered reasonable to conclude that subsidisation would be likely to continue in the future.

• (157) Since it has been demonstrated that subsidisation continued at the time of the review and will likely continue in the future, the issue of likelihood of recurrence of subsidisation is irrelevant.

COMMUNITY INDUSTRYCommunity production

• (158) During the review investigation period, the like product was manufactured in the Community by the following Community producers: Sandoz, DSM, ACS Dobfar SpA and Antibioticos S.A.. Sandoz requested a combined expiry and interim review of the anti-subsidy measures in force. DSM supported the request. Sandoz and DSM fully cooperated with the review investigation. The other Community producers neither cooperated nor opposed the initiation of this combined expiry and interim review.

• (159) One cooperating Community producer imported two types of the product concerned from India during the period considered, as well as from other third countries. This activity does not change its qualification as a producer in the meaning of Article 9(1) of the basic Regulation. Compared to its Community production of the like product, the quantities imported from India during the review investigation period represented only a relatively minor proportion of less than 10 %. Furthermore, its imports of the product concerned from India are only of a temporary nature since it is restructuring its production in the Community and it has started producing types of the like product which it has been importing from, inter alia, India.

Definition of the Community industry

• (160) The like product produced by the cooperating Community producers during the review investigation period represented 70,5 % of the total Community production of the like product. These companies, therefore, constitute the Community industry within the meaning of Article 9(1) of the basic Regulation. They are referred to as the ‘Community industry’ hereafter.

ANALYSIS OF THE SITUATION ON THE COMMUNITY MARKETIntroduction

• (161) The relevant Eurostat statistics for TARIC codes 2941101010, 2941102010 and 2941900030 together with data obtained from the verified questionnaire responses of the Community industry were used in the evaluation of volume and price trends.

• (162) Community industry data were obtained from the verified questionnaire responses of the cooperating Community producers.

• (163) Where necessary for reasons of confidentiality, indices are used to show the evolution of trends.

• (164) Following disclosure, one exporter claimed that the injury analysis should have taken place on the basis of information for the Community market after the enlargement as per 1 May 2004, i.e. including the 10 new Member States.

• (165) Given that Article 11(1) of the basic Regulation stipulates that information relating to a period subsequent to the IP shall not, normally, be taken into account, and as enlargement took place after the IP, this submission has to be rejected. In any event, the information available indicates that there is no production of the like product in the 10 new Member States, which could alter the situation of the Community industry.

• (166) In addition, as a general comment, it was submitted by one exporter without further substantiation that the injury analysis as disclosed did not consider all factors stipulated in Article 8 of the basic Regulation and was not based on positive evidence.

• (167) Concrete claims to specific aspects of the injury analysis will be addressed in the context of the respective part of the analysis below. However, in reply to the general comment it should be mentioned that, (i) the basis for the injury analysis were verified facts supported by evidence and (ii) as set out below all import related factors of Article 8(2) of the basic Regulation, all 17 indicators of Article 8(5) of the basic Regulation related to the situation of the Community industry and all known factors other than subsidised imports of Article 8(7) of the basic Regulation have been assessed.

Determination of the relevant Community market

• (168) In order to establish whether or not the Community industry suffered injury and to determine consumption and the various economic indicators related to the situation of the Community industry, it was examined whether and to what extent the subsequent use of the Community industry’s production of the like product had to be taken into account in the analysis.

• (169) Indeed, the like product is sold by the Community industry to both (i) unrelated customers and (ii) for further downstream processing to formulations in the same group of companies (related entities). Sales to unrelated entities were considered to form the ‘free market’. Sales to related entities for further downstream processing were considered as captive use, because of a lack to choose the supplier freely.

• (170) For the following economic indicators relating to the Community industry, it was found that a meaningful analysis and evaluation had to focus on the situation prevailing on the free market: sales volume and sales prices on the Community market, market share, growth, profitability, export volume and prices. Where possible and justified, these findings were subsequently compared with the data for the captive market, in order to provide a full picture of the situation of the Community industry.

• (171) As regards other economic indicators, however, it was found on the basis of the investigation, that they could reasonably be examined only by referring to the whole activity. Indeed, production (for both the captive and the free market), capacity, capacity utilisation, investments, stocks, employment, productivity, wages, ability to raise capital depend upon the whole activity, whether the production is captive or sold on the free market.

• (172) Two exporters contested the analysis in regard to the free and captive markets. They argued that it was not objective within the meaning of Article 8(2) of the basic Regulation.

• (173) However, it is considered that the present investigation established a clear separation between the free and the captive markets. In fact, the captive buyer had no choice but to buy from its captive supplier. Under such circumstances the analysis has to focus primarily on the free market, since sales on the captive market were not subject to competition with products sold on the free market and were therefore not affected by the subsidised imports. It is further noted that the injury analysis has despite this clear separation not ignored the captive market. To the contrary, the situation of both markets has been juxtaposed, as set out below, in order to reach an objective final determination on the state of the Community industry as a whole. Consequently, the claim has to be rejected.

Community consumption

• (174) In calculating the apparent Community consumption of the product concerned and the like product, the Commission added:

• —the volume of total imports of the product concerned and the like product into the Community as reported by Eurostat,

• —the volume of sales of the like product in the Community produced by the Community industry,

• —the volume of captive use of the like product by the Community industry,

• —and, on the basis of the information contained in the review request, the estimated volume of sales of the like product in the Community by the other known Community producers.

• As shown in the table below, Community consumption of the product concerned and the like product increased by 51 % over the period considered.

Consumption (in kg)	1999	2000	2001	2002	IP
Product concerned and like product	2 482 053	3 240 481	3 254 464	3 801 666	3 745 549
Index	100	131	131	153	151

• (175) The GOI and one exporter submitted that the consumption details as set out above should have been disclosed in more detail, notably per Community producer and separating free and captive consumption. Further, it was argued that the credibility of the data with regard to Community producers other than the Community industry has not been checked.

• (176) It is noted that the Community industry consists only of two parties of which only one operates on the captive market. Therefore, in view of Article 29 of the basic Regulation (confidentiality) it is not possible to disclose further details. Concerning data for Community producers other than the Community industry it should be recalled that these producers did not cooperate with the investigation. In the absence of any other information available concerning their contribution to the Community consumption, the data provided in the review request were used. Furthermore, no party provided conflicting information nor did the verification raise doubts as to their credibility.

Imports of the product concerned into the CommunityVolume, price and market share of imports from India

Imports (in kg)	1999	2000	2001	2002	IP
Product concerned	36 800	47 400	72 100	101 800	95 200
Index	100	129	196	277	259

• (177) The volume of imports of the product concerned increased significantly throughout the period considered. Imports in the review investigation period were 159 % greater than in 1999. These imports rose much faster than the general growth in consumption of 51 %, the increase in imports from third countries other than India of 13 % and the sales increase of the Community industry of 80 % during the same period. With regard to the developing country status of India and the provisions of Article 14(4) of the basic Regulation, it was found that the volume of imports from India in the review investigation period represented significantly more than 4 % of the total imports of the like product in the Community.

Average import price per kg in EUR	1999	2000	2001	2002	IP
Product concerned	34,66	33,94	35,51	36,57	35,34
Index	100	98	102	106	102

• (178) The average import price of the product concerned increased slightly with a peak in 2002 and subsequently fell back to the level before 2001.

EC market share	1999	2000	2001	2002	IP
Product concerned	1,5 %	1,5 %	2,2 %	2,7 %	2,5 %
Index	100	99	149	181	171

• (179) Indian imports’ market share on the Community market grew by 71 % over the period considered. It was submitted that the indexed increase should only amount to 66 instead of 71 %. On the basis of the rounded down market share in percentage this submission is arithmetically valid. Nevertheless, the above index is correctly calculated. For the purpose of precisely indexing the market share percentage points have not been rounded. This can be seen when comparing indexed figures and percentage points for 1999 and 2000. Furthermore, this methodology has consistently been applied in all tables of this Regulation.

Price undercutting

• (180) For the determination of price undercutting, price data referring to the review investigation period were analysed. To this end, sales prices of the Community industry to their first unrelated customers on an ex-works basis have been compared with sales prices of the Indian exporting producers to their first independent customers in the Community on a cif import basis, in both cases after deduction of discounts, rebates and commissions.

• (181) Based on the questionnaire replies, different product sub-types of the product concerned and the like product could be defined for comparison purposes based on the product type (i.e. amoxicillin trihydrate, ampicillin trihydrate and cefalexin) and its variants (i.e. powder or compacted form).

• (182) The Community industry's sales prices and the cif import prices of the exporting producers were compared at the same level of trade, namely traders/distributors within the Community market, on the basis of weighted average prices per product subtype. During the review investigation period, virtually all sales of the exporting producers in the Community were made via traders/distributors.

• (183) The results of the comparison, when expressed as a percentage of the Community industry’s sales prices during the review investigation period, showed significant price undercutting margins. On an exporting producer basis these margins were found to range between 11,5 and 17,1 %. Consequently, these price undercutting margins indicate continuous price pressure exerted by the Indian imports on the Community market despite the existence of measures.

Economic situation of the Community industryProduction, capacity and capacity utilisation

	1999	2000	2001	2002	IP
Index production	100	121	127	154	160
Index capacity	100	117	123	148	157
Index capacity utilisation	100	103	103	104	102

• (184) As a consequence of the steady increase in Community consumption, the Community industry’s production of the like product increased continuously over the period considered. This positive trend became more pronounced during the review investigation period when one of the cooperating Community producers started the production in the Community of one type of the like product which it only had imported previously.

• (185) The production capacity of the Community industry showed the same positive trend as its production. This is partly due to important investments in a new production plant which were made during the review investigation period by one of the cooperating Community producers.

• (186) The capacity utilisation rate has been stable at a relatively high level over the period considered. Such a high rate of utilisation is common in this type of industry, because of the continuous batch process utilised for the manufacture of the like product and in the case of the Community industry in addition due to its captive use.

• (187) Three exporters submitted upon disclosure that the development of these factors does not show any sign of injury. However, it is noted that the conclusion on injury has not been based on these factors.

Sales volume, sales price, market share and growthFree market sales

Free market sales in the Community	1999	2000	2001	2002	IP
Index volume	100	170	162	192	180
Index average sales price	100	94	94	94	95
Index market share	100	130	123	125	120

• (188) Based on the favourable evolution of Community consumption, the volume of free market sales of the Community industry in the Community increased over the period considered. The Community industry’s free market sales volume showed a higher growth than the growth of Community consumption during the period considered. However, between 2000 and the review investigation period, the increase of the Community industry’s free market sales volume was less than the increase of the Community consumption. The large increase of the Community industry’s free market sales volume between 1999 and 2000 is mainly attributable to the taking over of another Community producer by the Community industry. Nevertheless, the 80 % increase of the free market sales volume of the Community industry in the Community during the period considered was less pronounced than the 159 % increase of imports of the product concerned during the same period.

• (189) The GOI and four exporters pointed to the overall increase in sales of the Community industry as a positive sign and contended that it does not support an injury finding. It was further submitted that a comparison of the Community industry’s performance with the one of Indian exporters in relative terms would be misleading due to significant difference in the size of the competitors.

• (190) In reply to these submissions it should be noted that sales volume development has not been considered in the present case as a key factor indicating the extent of injury suffered. However, since the growth in sales for the Community industry can largely be attributed to a take over in 2000, i.e. the integration of the sales of a former competitor as opposed to new sales, it cannot be considered as an indicator for the absence of injury either. Furthermore, in 2001 and during the IP the sales volume of the Community industry on the free market decreased.

• (191) Despite growing demand indicated by the increased Community consumption, average free market sales prices of the Community industry declined from 1999 to 2000. This indicates price pressure exercised by competitors. Prices remained practically stable at the lower level up to the end of the review investigation period although demand further grew.

• (192) The GOI and three exporters claimed that the price development should be considered as positive for the Community industry.

• (193) This claim cannot be accepted. In fact, during the period considered the Community industry was at no time in the position to achieve non-injurious price levels.

• (194) The Community industry increased its market share by 30 % from 1999 to 2000 to the detriment of the market shares held by the other Community producers and exporters from third countries other than India. However, the Community industry’s market share fell from 2000 to the review investigation period when it reached its lowest level since 1999. This period coincided with a strong acceleration in growth of the share of imports from India.

• (195) One exporter argued that the decrease in market share of the Community industry in 2001 and the IP would be insignificant in light of the increase in 2000 and it further pointed to its overall increase in market share over the period considered.

• (196) However, this submission cannot be accepted, because it is based on an isolated focus 1999 versus the IP, which moreover neglects the exceptional nature of the increase in the year 2000. No explanation has been provided by this exporter why this obviously digressive development of the Community industry’s free market share after 2000 should not be considered as negative.

• (197) In this context, two other exporters argued that, given the more positive development on the captive market, this would be the result of a deliberate choice of the Community industry to opt for the more profitable formulations market.

• (198) This argument cannot be accepted as it ignores the increased stock which could have been sold to the free market.

Captive sales

Captive sales in the Community	1999	2000	2001	2002	IP
Index volume	100	88	124	180	189
Index average sales price	100	102	104	102	99
Index market share	100	67	95	117	125

• (199) While the Community industry’s sales volume on the free market increased by 80 % over the period considered, sales on the captive market increased by 89 %. In particular since 2001 an expansion on the Community industry’s captive market can be observed, whereas its situation on the free market remained practically unchanged. This coincides with a strong increase of imports from India on the free market, which implies that the Community industry used its option to switch markets at least to a certain extent in order to avoid direct competition with subsidised imports of the product concerned at low prices.

• (200) A similar pattern can be observed by examining comparatively the trends in growth of the Community industry’s market share both on the free and on the captive market. This again indicates an increasing strategic relevance of the captive market for the Community industry since 2001.

• (201) Whereas prices on the free market started to decrease already in 2000, the transfer prices on the captive market continued to increase moderately until 2001. However, with a time lag, starting in 2002 prices on the captive market showed a downward trend as well. This could be explained by the fact that transfer prices are generally not adjusted that quickly, because they are not shaped by direct competition. It is noted that the overall movement in prices of free market and captive sales during the period considered are similar.

Stocks

Stocks	1999	2000	2001	2002	IP
Index	100	74	100	141	161

• (202) The Community industry’s year-end stock levels in relation to production dropped by 26 % from 1999 to 2000 but then sharply increased by more than 115 % towards the end of the review investigation period. This increase coincided in time with a doubling of the Indian imports over the same period.

• (203) The GOI and four exporters contended that the increase in stocks was not abnormally high, thus not showing injury. Furthermore, the methodology of using year-end stock levels was contested. Instead, other approaches, like moving average stock levels or stocks in terms of number of days sales, were suggested as more appropriate indicators.

• (204) In reply to this submission it should be noted that the standard methodology of the Community to quantify stock levels was applied. The approach is objective and in line with WTO obligations. The claim for the use of another methodology was not substantiated. Thus, the suggestion to choose an alternative methodology is refuted. Secondly, on the basis of verified facts it cannot be denied that stock levels increased sharply.

ProfitabilityFree market sales

Profitability (Free market sales in the Community)	1999	2000	2001	2002	IP
Index	– 100	113	239	146	87

• (205) The profitability of the Community industry expressed in terms of return on net sales on the free market improved significantly from a loss-making situation in 1999. Following the imposition of the existing measures in 1998, profitability increased up to 2001, but then deteriorated sharply towards the review investigation period. In addition, it is pertinent that the Community industry was at no time during the period considered in a position to reach even half of the profit margin, which, according to the findings in the original investigation, it could reasonably have obtained in the absence of subsidised imports, i.e. 15 %. The development of the profitability and in particular its decline since 2002 is considered very important as it affects the level of financial resources available to the Community industry for investments in research and development that are necessary for further improvements to the production processes of existing products and the development of new products.

• (206) The GOI and four exporters submitted comments on the profitability analysis. It was submitted that, (i) the Community industry achieved reasonable profitability levels, (ii) a non-injurious profitability margin of 10 % (see recital 260), would be too high and instead 5 % is sufficient, (iii) the profitability decline could be essentially attributed to the investment policy of the Community industry, (iv) the start up activities of one party qualify for self inflicted injury and (v) the profitability development should have been disclosed for each Community producer.

• (207) It is reiterated that the Community industry was at no time, during the period considered, in a position to achieve reasonable profit margins as set out above. Thus, the deterioration since 2002 only worsened an already unsatisfactory situation. Further, in view of the special circumstances of the pharmaceutical sector a profit margin of 5 % is considered not to be sufficient. The Community industry has provided evidence that it can achieve for comparable bulk drugs profit figures of above 10 %. Such profit levels are necessary to provide the pharmaceutical sector sustainably with the necessary financial resources to carry on pharmaceutical innovation with its high inherent economic risks. In addition, the lack of reasonable profit margins achieved by the Community industry cannot just be explained by its investment policy. Only one Community producer was in a start up phase during the period considered, but neither party achieved reasonable profit margins. Finally, in view of Article 29 of the basic Regulation (‘confidentiality’) it is not possible to disclose further details.

Captive sales

Profitability (Captive sales in the Community)	1999	2000	2001	2002	IP
Index	100	482	564	431	325

• (208) The profitability trends of captive sales follow the same line, although on a higher level, i.e. increasing until 2001 and consecutively diminishing. The differences in profitability levels can mainly be attributed to the facts that, (i) selling general and administrative costs (SG & A) for captive sales are lower, because they do not necessitate marketing costs, and (ii) to higher transfer prices as compared with prices on the free market. In the absence of the higher profit levels achieved on captive sales, the industry would be in a worse overall financial situation.

Investments, return on investment, cash flow and the ability to raise capital

	1999	2000	2001	2002	IP
Index investments	0	100	300	1 123	351
Index return on investment	– 100	160	286	161	91
Index cash flow	100	186	71	160	33

• (209) After 1999, the Community industry continually made investments for the manufacture of the like product. In particular in 2002, it strongly invested in new production techniques in order to remain competitive, improve environmental and security standards and increase production capacities.

• (210) From 1999 to 2001, i.e. after the imposition of measures, return on investment improved. Since then, however, it strongly declined. Although this can be partially attributed to the start-up phase of one new production plant, the unsatisfactory profitability situation, caused by competitors’ price pressure, contributed to this situation.

• (211) During the period considered, the fluctuations of the cash flow generated by the sales of the like product are to a certain extent the consequence of the Community industry’s investment policy during this period. However, the drastic decline in cash flow between 2002 and the review investigation period cannot only be explained by this factor. Price pressure exercised by competitors contributed to the unsatisfactory cash flow development as well.

• (212) The Community industry did not experience any significant difficulty to raise capital.

• (213) Upon disclosure it was submitted by the GOI and exporters that, (i) the data above should have been disclosed separately for each Community producer separately, (ii) the ability to raise capital did not support an injury finding, (iii) the cash flow allegedly cannot follow this trends in view of the trends for return on investments and profitability and should therefore be re-evaluated and, (iv) without further substantiation the analysis would be insufficient.

• (214) In reply to these submissions it should be recalled that in accordance with Article 29 of the basic Regulation (confidentiality) the data cannot be disclosed separately for each Community producer. In regard to the ability to raise capital, no negative conclusion on injury has been drawn. As far as the submission regarding cash flow is concerned, after careful re-examination the respective index as set out above is confirmed. In regard to the general submission of insufficient analysis in respect of above factors it should be considered that, (i) the injury finding is not essentially based on these indicators and (ii) that the submission has not substantiated why a further elaboration could still change the overall finding.

Employment, productivity and wages

	1999	2000	2001	2002	IP
Index employment	100	101	101	187	185
Index productivity	100	120	127	83	86
Index wages	100	103	106	185	178

• (215) Employment for the like product remained stable until 2001 but increased considerably in 2002 due to the setting up of a new production plant in the Community by one of the cooperating Community producers. The total cost for wages followed the same trend. However, productivity per worker, although increasing until 2001, declined in 2002. This can be clearly attributed to the start-up phase of one new production plant. No evidence of a decrease of efficiency was found during the investigation.

• (216) The GOI and four exporters submitted that the trends for employment, productivity and wages are not supportive for a finding of material injury in the present case.

• (217) However, it should be noted, that no such conclusion has been made for employment and productivity. With regard to wages, only the total amount of wages increased. On average per employee, wages even decreased slightly (see table below). This shows that, (i) no positive development per employee took place and (ii) the determination of the Community industry to be cost efficient.

	1999	2000	2001	2002	IP
Index wages per employee	100	103	105	99	96

Magnitude of subsidy and recovery from past subsidisation

• (218) Given the volume and in particular the prices of the subsidised imports from India, the impact of the actual amount of subsidisation, which is significant, cannot be considered to be negligible.

• (219) In this context the GOI and three exporters submitted that the subsidy margins have been overstated.

• (220) However, as set out in recitals 153 and 154 above, the investigation has shown that the amount of countervailable subsidies expressed ad valorem for the investigated exporting producers ranges between 25,3 and 35,1 %. This is a clear finding of significant subsidisation.

• (221) The situation of the Community industry improved in the period considered. However, it did not fully recover from past subsidisation and continues to be weak.

Conclusion on the economic situation of the Community industry

• (222) Between 1999 and the review investigation period the volume of the subsidised imports of the product concerned increased significantly by 159 % and their share of the Community market grew by 70 %. This development contrasts with the much less favourable development for exporters from other countries and the Community industry. Imports from other countries to the Community market grew only by 7 % during the period considered and their market share even decreased by 29 %. The sales volume of the Community industry grew by 80 % and its market share by 20 % during the period considered. However, this positive development can essentially be attributed to the take over of another Community producer by the Community industry in 2000. Since 2001, the trend in market share development for the Community industry is even digressive. In particular, it can be observed that as of 2000 the Community industry did not, in relative terms, keep pace with the increase of Community consumption and the strong evolution of its Indian competitors on the Community market.

• (223) In this context, it is noted that the average prices of subsidised imports from India were consistently lower than those of the Community industry during the period considered. Moreover, during the review investigation period, the prices of the imports from the country concerned undercut those of the Community industry. On a weighted average basis, price undercutting was in the review investigation period between 11,5 and 17,1 %.

• (224) As a consequence of this price pressure exercised by subsidised Indian imports, the Community industry was at no time during the period considered in a position to reach non-injurious price levels. Although profitability of the Community industry initially improved after the imposition of measures, it has deteriorated since 2001 and its actual level is well below what it could reasonably have achieved in the absence of subsidised imports, i.e. 10 % on turnover (see recital 260). However, only an acceptable level of profitability will allow the Community industry to remain viable in a sustainable way.

• (225) This negative tendency for the Community industry is further reflected in the picture displayed by the trends in return on investment and cash flow.

• (226) Regarding captive sales, the option for the Community industry to sell part of its production on the captive market provided it with the opportunity to maintain high levels of capacity utilisation. High capacity utilisation contributes to decrease cost of production because of economies of scale. Furthermore, as outlined above, the trends in sales volumes, prices and market share between the free and captive markets did not diverge significantly. In the absence of the higher profits achieved by the industry on captive sales, the industry would be in a worse financial situation. Thus, the captive use did not contribute to the injurious situation. To the contrary, without a captive market the injurious situation of the Community industry might even have been worse.

• (227) Two exporters contended that it cannot be concluded that the captive market sales did not contribute to the injurious situation of the Community industry, because captive sales prices are allegedly unreliable, i.e. the profitability of captive sales would be artificially too high.

• (228) However, higher profitability on the captive market was not mainly the result of higher transfer prices, but in particular attributable to lower SG & A (see recital 208). Furthermore, this submission neglects the effect of economies of scale. Thus, it cannot change the conclusion that the captive sales did not contribute to the injury.

• (229) As a result, it was confirmed that, overall, the Community industry has suffered material injury within the meaning of Article 8(1) of the basic Regulation. It should be recalled that Article 8(5) of the basic Regulation does not mandate all economic indicators for the Community industry to be negative in order to establish material injury. Moreover, not all economic indicators have the same weight. Profitability, though, is one of the key economic indicators, since it constitutes the ultimate goal of every economic undertaking. In the present case, insufficient profitability levels were established. Another important injury indicator having a major impact on profitability is the price levels. The Community industry was never in a position to achieve non injurious price levels during the period considered on the free market due to external price pressure, mainly from heavily subsidised Indian imports.

Effect of the subsidised imports

• (230) In 2000, and most likely due to the imposition of measures, India lost its position as the second largest exporter to the Community market for an interim period, whereas notably Omani exporters gained market share. However, since then, Indian exporters not only have recovered their position, but in the review investigation period they even took over the lead as the largest exporter to the Community.

• (231) This growth in volume of the subsidised imports from India, in particular since 2002, coincided with the fact that in 2002, the profitability for the Community industry decreased as compared with 2001, i.e. by around 36 %. It was found that, during this time, one Community producer set up a new plant and found itself in a start-up phase which may have had an effect on its profitability in that period. However, it was also found that the other Community producer, which was not in a start-up phase, found itself confronted with a significant decrease in profitability, i.e. by 17 % as compared with 2001 which further deteriorated during the review investigation period. Moreover, as stated under recital 207, at no point in time was the Community industry in a position to reach non-injurious price levels. To the contrary, again starting in 2002, the Community industry had to adjust prices downwards in order to defend its market share.

• (232) Upon disclosure, three exporters submitted that the Indian imports share on the Community market, 2,5 % during the IP, and their volume in relation to total imports, 8,4 % during the IP, both of which slightly decreased as compared with 2002, would be too small and marginal to have any injurious impact in particular in view of a bigger market share hold by the Community industry. Furthermore, it was argued that an analysis expressed in relative terms would be misleading, because India started from a very low level, 1,5 % market share and 3,7 % import volume in 1999.

• (233) In reply to this submission it should be considered that both, India’s market share and its import volume during the IP, are well above the de minimis thresholds set in Articles 10(11) and 14(4) of the basic Regulation, thus can have a causal effect. According to Article 8(6) of the basic Regulation, a causal effect can be manifested alternatively either by the import volume or by the price levels of subsidised imports. Such price level impact can clearly be observed in the present case. As already established in the course of the original investigation, the product under investigation, a bulk commodity, is highly price sensitive and reacts swiftly to any downward pressure. In such cases small quantities can influence prices on the market. In fact, over the period considered the Indian prices set on average the price pressure benchmark in this case.

• (234) It was therefore confirmed that the subsidised imports from India had a considerable negative impact on the situation of the Community industry during the period considered, in particular in terms of profitability.

Impact of other factorsImports from other third countries

Third country imports	1999	2000	2001	2002	IP
Volume (kg)	Volume (kg)	Volume (kg)	Volume (kg)	Volume (kg)	Volume (kg)
India	36 800	47 400	72 100	101 800	95 200
Index	100	129	196	277	259
Oman	77 400	119 700	85 100	88 400	93 500
Index	100	155	110	114	121
USA	11 100	2 800	16 600	106 300	70 000
Index	100	25	149	932	631
China	0	3 900	21 800	75 600	63 000
Index	0	100	559	1 938	1 615
South Korea	19 800	75 300	40 200	54 500	45 000
Index	100	380	203	275	227
Singapore	0	4 600	128 300	62 700	37 700
Index	0	100	2 789	1 363	820
Average import price per kg (EUR)	Average import price per kg (EUR)	Average import price per kg (EUR)	Average import price per kg (EUR)	Average import price per kg (EUR)	Average import price per kg (EUR)
India	34,66	33,94	35,51	36,57	35,34
Index	100	98	102	106	102
Oman	36,10	36,21	39,30	39,15	38,34
Index	100	100	109	108	106
USA	74,87	115,35	108,90	101,40	48,74
Index	100	154	145	135	65
China	0,00	188,97	116,06	68,22	58,59
Index	0	100	61	36	31
South Korea	34,84	37,52	37,66	45,59	48,06
Index	100	108	108	131	138
Singapore	0,00	76,88	57,47	57,47	51,28
Index	0	100	75	75	67

• (235) Imports of the product under consideration from countries other than India increased by only 7 % between 1999 and the review investigation period, i.e. well below the rate of increase of the Community consumption. Amongst these countries, Oman, the United States of America (USA), China, South Korea and Singapore are the main suppliers to the Community market. However, their average import prices were considerably higher than the Indian import prices and, except for the import prices from Oman, also the Community industry prices. Import prices of Oman are at comparable levels to the Community industry’s prices, but Oman’s increase in market share over the period considered was much less pronounced than that for the other third countries.

• (236) Following disclosure, it was submitted by the GOI and two exporters that the countervailing duty in place for Indian imports should have been taken into consideration when comparing average sales prices. This would allegedly lead to practically similar Indian and Omani price levels. In addition, it was noted that average prices from some third countries, notably the USA and China, decreased significantly over the period considered whereas, inter alia, Indian prices increased. Furthermore, it was submitted by another exporter that the volume decrease in Indian imports between 2002 and the review investigation period has not been properly taken into account in the analysis, that other third countries were the main suppliers and that average prices from South Korea and India were similar from 1999 to 2001.