(1)

On 17 May 2024, the European Commission (‘the Commission’) initiated an anti-subsidy investigation with regard to imports of optical fibre cables (‘OFC’) originating in India (‘the country concerned’) on the basis of Article 10 of the basic Regulation. It published a Notice of Initiation in the Official Journal of the European Union (2) (‘the Notice of Initiation’).

(2)

The Commission initiated the investigation following a complaint lodged on 4 April 2024 by Europacable (‘the complainant’). The complaint was made on behalf of the Union industry of optical fibre cables in the sense of Article 10(6) of the basic Regulation. The complaint contained evidence of subsidisation and of resulting material injury that was sufficient to justify the initiation of the investigation.

(3)

Prior to the initiation of the anti-subsidy investigation, the Commission notified the Government of India (‘GOI’) (3) that it had received a properly documented complaint and invited the GOI for consultations in accordance with Article 10(7) of the basic Regulation. Consultations were held on 15 May 2024 with the GOI. However, no mutually agreed solution could be reached.

(4)

On 16 December 2024, the Commission imposed definitive anti-dumping duties and definitively collected provisional duties imposed on imports of the same product originating in India (4) in an investigation which had been initiated by a Notice of initiation published on 16 November 2023 (‘the separate anti-dumping investigation’). The analysis of the economic situation of the Union industry of the present Regulation is mutatis mutandis identical to the findings in the separate anti-dumping investigation, since the definition of the Union industry, the sampled Union producers, the period considered, and the investigation period are the same in both investigations.

(5)

On 19 January 2022, the Commission imposed countervailing duties on imports of OFC originating in China (5) following the initiation of an anti-subsidy investigation which had been initiated by a Notice of initiation published on 21 December 2020.

(6)

OFC have also been subject to an anti-dumping investigation concerning imports from China. On 18 November 2021, the Commission imposed definitive antidumping duties imposed on imports from China (6). On 9 August 2023, the Commission adjusted these anti-dumping duties following an absorption investigation (7).

(7)

The Commission made imports of OFC subject to Registration by Commission Implementing Regulation (EU) 2024/2724 (8).

(8)

Considering that no provisional measures were imposed as described in recital (22), the Commission did not carry out the analysis related to the retroactive collection of duties in line with Article 16(4) of the basic Regulation.

(9)

In the Notice of Initiation, the Commission invited interested parties to contact it in order to participate in the investigation. In addition, the Commission specifically informed the complainants, other known Union producers, the known exporting producers and the Indian authorities, known importers, users, and traders, as well as associations known to be concerned about the initiation of the investigation and invited them to participate.

(10)

Interested parties had an opportunity to comment on the initiation of the investigation and to request a hearing with the Commission and/or the Hearing Officer in trade proceedings.

(11)

In the Notice of Initiation, the Commission stated that it might sample interested parties in accordance with Article 27 of the basic Regulation.

(12)

In its Notice of Initiation, the Commission stated that it had provisionally selected a sample of Union producers. The Commission selected the sample on the basis of the largest volume of production and sales of the like product in the Union during the investigation period that also ensured a large geographical spread. This sample consisted of three Union producers. The sampled Union producers accounted for more than 50 % of the estimated total volume of production and more than 75 % of the total estimated sales of the like product in the Union. The Commission invited interested parties to comment on the provisional sample. No comments were received on the provisional sample, and it was confirmed as the final sample.

(13)

To decide whether sampling was necessary and, if so, to select a sample, the Commission asked unrelated importers to provide the information specified in the Notice of Initiation.

(14)

No unrelated importer provided the requested information or agreed to be included in the sample. The Commission decided that sampling was not necessary.

(15)

To decide whether sampling was necessary and, if so, to select a sample, the Commission asked all exporting producers in India to provide the information specified in the Notice of Initiation. In addition, the Commission asked the Mission of the Republic of India to the European Union to identify and/or contact other exporting producers, if any, that could be interested in participating in the investigation.

(16)

Eleven exporting producers in the country concerned provided the requested information and agreed to be included in the sample. In accordance with Article 27(1) of the basic Regulation, the Commission selected a sample of three groups of exporting producers on the basis of the largest representative volume of exports to the Union which could reasonably be investigated within the time available. The sampled groups of exporting producers represented more than 80 % of total exports of OFC from India to the Union during the investigation period. In accordance with Article 27(2) of the basic Regulation, all known exporting producers and the authorities of the country concerned were consulted on the selection of the sample.

(17)

The Commission sent questionnaires to the sampled exporting producers, to the three sampled Union producers and to known users. The same questionnaires were made available online (9) on the day of initiation. The Commission sent also a questionnaire requesting the macro-indicators of the Union industry to the complainant.

(18)

The Commission also sent a questionnaire to the GOI.

(19)

The Commission received questionnaire replies from the GOI, the sampled exporting producers, the sampled Union producers, the complainant, and one user.

(20)

The Commission sought and verified all the information deemed necessary for a determination of subsidy, resulting injury and Union interest. Verification visits pursuant to Article 26 of the basic Regulation were carried out at the premises of the following companies:

(21)

The investigation of subsidisation and injury covered the period from 1 October 2022 to 30 September 2023 (‘the investigation period’). The examination of trends relevant for the assessment of injury covered the period from 1 January 2020 to the end of the investigation period (‘the period considered’).

(22)

On 17 January 2025, pursuant to Article 29a(2) of the basic Regulation, the Commission informed interested parties that it intended not to impose provisional measures and to continue with the investigation.

(23)

On 18 March 2025, the Commission informed all parties of the essential facts and considerations on the basis of which it intended to impose a definitive countervailing duty on imports of the OFC originating in India (‘final disclosure’). All parties were granted a period within which they could make comments on the final disclosure.

(24)

Comments following final disclosure were received on 2 April 2025.

(25)

Parties who requested so were granted an opportunity to be heard. Hearings took place with the MP Birla, HFCL and STL groups.

(26)

The Commission provided additional disclosure on 24 April 2025.

(27)

Comments following the additional disclosure were received on 25 April 2025.

(28)

Following additional disclosure, the STL group claimed that the investigation had lacked transparency since the Commission had not addressed any of its comments to the Definitive Disclosure in the Additional Disclosure Document. The STL group concluded that this lack of transparency affected its rights of defence.

(29)

The Commission disagreed with the claim that this investigation lacked transparency and therefore on any affectation on the rights of defence of the STL Group. The purpose of an Additional Disclosure was not to address all the comments received from interested parties following Definitive Disclosure but to give interested parties the opportunity to comment on any key changes to the facts and findings following Definitive Disclosure. All the comments submitted by the STL Group following Definitive Disclosure were addressed in this Implementing Regulation, and in particular, in recitals (75), (95), (134), (150) and (197). Thererefore, the claim was rejected.

(30)

The product under investigation is single mode optical fibre cables, made up of one or more individually sheathed fibres, with protective casing, whether or not containing electric conductors, whether or not connectorised. The following products are excluded:

(31)

Optical fibre cables are used as an optical transmission medium in telecommunication networks in long haul, metro, and access networks.

(32)

The product concerned is the product under investigation originating in India, currently falling under CN code ex 8544 70 00 (TARIC codes 8544 70 00 10 and 8544 70 00 91).

(33)

The investigation showed that the following products have the same basic physical and technical characteristics as well as the same basic uses:

(34)

The Commission decided that those products were therefore like products within the meaning of Article 2(c) of the basic Regulation.

(35)

On the basis of the information included in the complaint, the Notice of initiation and the replies to the Commission’s questionnaires, the alleged subsidisation through the following schemes by the GOI were investigated:

(36)

No benefit for the three sampled exporting producers has been found during the investigation period.

(37)

No benefit for the three sampled exporting producers has been found during the investigation period.

(38)

This scheme was discontinued in 2022. No benefit for the three sampled exporting producers has been found during the investigation period.

(39)

No benefit for the three sampled exporting producers has been found during the investigation period.

(40)

No benefit for the three sampled exporting producers has been found during the investigation period.

(41)

No benefit for the three sampled exporting producers has been found during the investigation period.

(42)

No benefit for the three sampled exporting producers has been found during the investigation period.

(43)

The Commission established that all sampled groups of exporting producers used M-SIPS during the investigation period.

(44)

The Government of India announced the Modified Special Incentive Package Scheme (M-SIPS) in 2012 (10) (‘the 2012 M-SIPS notification’). The scheme was amended in 2015 (11) (‘the 2015 M-SIPS notification’) and in 2017 (12) (‘the 2017 M-SIPS notification’).

(45)

The scheme is available to manufacturers of the electronic products and accessories listed in the 2012 M-SIPS notification. The 2015 M-SIPS notification widened the scope of eligibility to additional electronic products.

(46)

Manufacturers of OFC are eligible. Manufacturers of optical fibre (OF), an input material for manufacturing OFC, and manufacturers of glass preform, an input material for the manufacturing of OF, are also eligible.

(47)

The scheme is administered by the Ministry of Electronics and Information Technology (‘MeitY’). The scheme provides grants for investing in new facilities or for increasing the capacity of existing ones. The grants amount to 20 % of the investments in machinery and equipment carried out in Special Economic Zones (SEZs) and to 25 % of the capital investments in non-SEZs. These grants are paid by the GOI in several instalments after the full amount is approved by the GOI.

(48)

Applicants must submit their application online. Once approved, the beneficiary submits to the government payment claims in line with the expenditure incurred. Against those payment claims, the government pays out the incentives to the beneficiary. When the scheme was set up, payments were made annually. Following the 2015 M-SIPS notification, payments can be made quarterly.

(49)

Resulting from the 2017 M-SIPS notification, the deadline to send applications expired on 31 December 2018. The incentives were to be made available within five years from the approval of the project.

(50)

M-SIPS provides subsidies in the form of grants within the meaning of Article 3(1)(a)(i) and Article 3(2) of the basic Regulation. Disbursements under M-SIPS are financial contributions by the GOI, since GOI makes a direct transfer to the beneficiary. In addition, M-SIPS payments confer a benefit since the beneficiary gets a compensation for part of the investment it has carried out.

(51)

M-SIPS is also deemed to be specific, as eligibility is limited by law to the manufacturers indicated in Section 3.3.1.1.2 and therefore countervailable under Article 4(2), first subparagraph, point (a) of the basic Regulation.

(52)

Following definitive disclosure, the GOI claimed that M-SIPS is not a countervailable subsidy. In particular, the GOI claimed that (i) M-SIPS was not a grant since it reimbursed partially the costs incurred by the recipient; (ii) M-SIPS did not confer a benefit to the recipient since it did not provide an advantage beyond what was commercially available; and (iii) M-SIPS was not specific since it broadly applied to the entire electronics manufacturing sector.

(53)

The Commission disagreed with the claim that M-SIPS was not a countervailable subsidy. As regards the first claim, that M-SIPS was paid by the GOI to partially reimburse the investment costs incurred by the recipient was not relevant for establishing that M-SIPS is a financial contribution in the form of a grant for the amounts disbursed. As regards the second claim, the Commission considered that as a result of the M-SIPS payment, the recipient obtained a benefit since it was reimbursed for an investment cost that would have otherwise had to bear, and therefore contributed to improve the liquidity of the recipient. As regards the third claim, M-SIPS was deemed specific since as it was limited to companies that operate in the electronics manufacturing sector, it was not available for companies that operate in other economic sectors. Therefore, the claim was rejected.

(54)

The amount of countervailable subsidies was calculated, in accordance with Article 7(3) of the basic Regulation, on the basis of the amount granted by GOI to the beneficiaries spread across a period which reflects the normal depreciation period of such capital goods in the industry concerned. The amount calculated, which is attributable to the IP, has been adjusted by adding interest during this period in order to reflect the full-time value of the money. The commercial interest rate during the investigation period in India was considered appropriate for this purpose.

(55)

Following definitive disclosure, the MP Birla Group claimed that the commercial interest benchmark used by the Commission was inappropriate. In particular, the MP Birla Group claimed that (i) the source used by the Commission was paywalled and therefore, not publicly accessible to assess its appropriateness; (ii) the proposed benchmark covered a calendar year (2023) and therefore not the IP which covered the period from 1 October 2022 to 30 September 2023. In addition, the MP Birla Group argued that the data published by the Reserve Bank of India (RBI) (13) was more appropriate since it is publicly available and allows constructing a specific benchmark for the IP. The MP Birla Group had proposed to calculate the benchmark as the average of the Marginal Cost of Fund Based Lending Rate (MLCR) applicable to maturities ranging from overnight to 3 years.

(56)

The Commission examined the data from the RBI proposed by the MP Birla Group. While the fact that information available upon the payment of a fee is considered to be available to interested parties, the Commission considered that in this case, the official free of charge data available was the most appropriate source as it allowed constructing a specific benchmark for the IP. The Commission therefore recalculated the respective benefits. The Commission noted that the proposed data however did not include the mark-up that commercial banks normally charge their clients on top of the MCLR established by the RBI. The Commission calculated the benchmark as the average MCLR for maturities applicable for 1 year and 3 years, since shorter maturities were not considered relevant in the context of purchasing fixed assets.

(57)

While MP Birla Group used this scheme to support the manufacturing of OFC, the HFCL, STL and MP Birla groups also used this scheme to support the manufacturing of input materials. Therefore, the Commission apportioned the appropriate amount of benefit for the input materials to the OFC manufacturers which was then used in the calculation of the countervailable subsidy amount on the basis of the method described in recital (54).

(58)

In accordance with Articles 7(2) and 7(3) of the basic Regulation, the Commission allocated this subsidy amount over either the turnover of all types of OFC manufactured by the exporter (14) or the turnover of the product under investigation manufactured by the exporter, as applicable, during the IP as appropriate denominator because the subsidy was not granted by reference to the quantities manufactured, produced, exported or transported.

(59)

The MP Birla Group claimed that, in allocating the benefit received under M-SIPS by the related input supplier Birla Furukawa Fibre Optics Private Ltd (‘Birla Furukawa’) to the exporting producers in the MP Birla Group, the Commission presumed the pass-through of the benefit. According to the MP Birla Group, this would run contrary to a finding of the Panel in US – Softwood Lumber IV, confirmed by the Appellate Body (15), whereby the investigating authority should establish that the benefit conferred on the input producer is passed through, where input producers and downstream processors operate at arm’s length. Prices between Birla Furukawa and the exporting producers in the MP Birla Group would be at arm’s length and the MP Birla Group provided in support the boards’ resolutions of the three exporting producers in the MP Birla Group covering the IP and a comparison with prices charged to other customers during the IP.

(60)

The Commission, firstly, noted that MP Birla Group’s argument confuses the question of pass-through with the separate issue of the allocation of the subsidy received by a related company to the product concerned. Indeed, when a party (in this case the input supplier) is related to the exporting producer, the Commission does not need to carry out a pass-through analysis. Instead, because of the relationship, the Commission only needed to properly allocate the benefit received by Birla Furukawa to the product concerned.

(61)

Secondly, the Commission recalled that, as explained in recital (57), the allocation key used corresponded to the volume of the input sold from the related input supplier to the exporting producers. The Commission considered that, by means of using the intercompany sales volume as an allocation key, properly allocated the subsidies received within the group to the product concerned. This allocation key was not disputed by any interested party.

(62)

The Commission also noted that the evidence brought forward by MP Birla Group was not reliable and conclusive in assessing whether the prices of the input between the related parties were indeed at arm’s length. In particular, as regards the boards’ resolutions, while they indicated that transactions with Birla Furukawa ‘shall be entered at prevailing market price’, they allowed for a variation in such price by +/- 20 % for financial year 2022-23 and by +/- 10 % for financial year 2023-24. Allowing such variations contradicted the statement that transactions should have been at prevailing market prices and, thus, that intercompany prices were at arm’s length. In addition, as regards the comparison of prices reported by Birla Furukawa, the Commission noted that MP Birla Group did not show that prices to unrelated customers were at arm’s length and that they constituted an adequate benchmark for the comparison with related prices. Moreover, it is unclear how the unit prices to BCL, VTL and UCL, on the one hand, and other customers, on the other hand, have been derived from sales data of Birla Furukawa. In particular, the comparison provided by MP Birla Group did not take into account that, amongst the other companies to which prices to MP Birla Group were compared, there were also other companies which, as part of the Furukawa group, were related to Birla Furukawa. Therefore, MP Birla Group compared prices to related companies with a mix of prices to related and unrelated companies. Finally, it appeared that MP Birla Group cherry-picked certain types of the product under investigation for which the difference in unit price between sales to MP Birla Group and other companies was convenient for its argument. In conclusion, MP Birla Group did not provide reliable and conclusive evidence to show that prices between Birla Furukawa and the exporting producers in the MP Birla Group were at arm’s length. Therefore, this claim was rejected.

(63)

Following definitive disclosure, the Commission identified and corrected a clerical error in the subsidy rate for the HFCL and STL Groups.

(64)

The subsidy rate established with regard to the scheme described above during the investigation period for the sampled groups of companies amounted to:

Modified Special Incentive Package Scheme

(65)

The Commission established that the STL and MP Birla groups of exporting producers used IES during the investigation period. This scheme has already been countervailed in a countervailing duty proceeding concerning graphite electrode systems in India (16) (‘the GES definitive Regulation’), and in particular, in recitals (140) to (150).

(66)

The ‘Interest Equalisation Scheme on Pre and Post Shipment Rupee Export Credit’ entered into force on 1 April 2015 and was announced by the Reserve Bank of India (‘RBI’) on 11 February 2016 (17) (‘the 2016 RBI Circular’). The IES was originally set to expire on 31 March 2020. However, the scheme was subject to several extensions, including an extension until 31 March 2024 (18) (‘IES IP extension notification’) which covered the IP.

(67)

The IES is available to exports of a wide range of products, including OFC, irrespective of the size of the exporting-producer or merchant-exporter and to any exported product manufactured by Micro, Small and Medium Enterprises (MSMEs).

(68)

The IES is a scheme administered by the Directorate-General of Foreign Trade (DGFT). The scheme allows eligible exporters to offset part of the interest paid for loans obtained from the participating banks as provided in page 4, point 2 of the 2016 RBI Circular. The IES IP extension notification established a 3 % interest offset for MSMEs manufacturer-exporters exporting under any HS line and 2 % for manufacturer-exporters and merchant exporters exporting under 410 HS lines, including OFC as provided in the 2016 RBI Circular.

(69)

The participating banks receive a compensation from the Reserve Bank of India so that the lower interests are provided to the eligible exporters. The benefit is available from the date of disbursement up to the date of repayment or up to the date beyond which the outstanding export credit becomes overdue. However, the IES is available to the eligible exporters only during the period when the scheme is in force.

(70)

As the Commission already established in recital (146) of the GES Regulation, the IES provides subsidies within the meaning of Article 3(1)(a)(iv) and Article 3(2) of the basic Regulation in the form of an interest offset that the cooperating banks must apply to eligible companies as indicated in recital (68) above.

(71)

Furthermore, as the Commission already established in recital (147) of the GES Regulation, the IES is contingent in law upon export performance, since such interest offset cannot be obtained without a commitment to export as indicated in recital (68) above, and it only covers exported products. Therefore, it is deemed to be specific and countervailable under Article 4(4), first subparagraph, point (a) of the basic Regulation.

(72)

Following definitive disclosure, the GOI claimed that IES is not a countervailable subsidy for three reasons: (i) the IES does not involve a direct transfer of funds since the GOI only reiumburses the banks for part of the interest reduction. Furthermore, the GOI claimed that the banks have full discretion in granting the loans; (ii) the IES does not confer a benefit to recipients since the IES only adjusts the borrowing costs to reasonable market level; and (iii) the IES is not export contingent since recipients do not need to meet specific export targets.

(73)

The Commission noted that it already found the IES to be a countervailable subsidy in the GES case. As regards the first claim, the IES constitutes a financial contribution since the GOI reiumbursed the cooperating banks for the interest rate offset that banks must apply to their eligible customers on the basis of the rules set out by the GOI. As regards the second claim, the IES confers a benefit of a 2 % interest offset which recipients would have otherwise have to pay. As regards the third claim, the Commission did not consider necessary to have export targets to find the IES export contingent. As already established in the GES Regulation, the IES was found to be export contingent since such loan interest offset cannot be obtained without a commitment to export. Therefore, the Commission rejected the claim.

(74)

The GOI also claimed that the IES was discontinued on 31 December 2024. The STL Group claimed that the extension of the scheme dated on 28 June 2024 only covered Micro, Small and Medium Enterprises (MSMEs) exporters and not large companies. The GOI and STL Group submitted that since exporting companies would not be able to benefit from the IES in the future, the IES should not be taken into account in the calculation of the countervailing duties.

(75)

The Commission examined the evidence submitted by the STL Group which consisted of three Trade Notices dated on 28 June 2024, 31 August 2024 and 30 September 2024 regarding extensions of the IES. The evidence showed that the extension dated on 28 June 2024, was indeed limited to MSMEs exporters. The Trade Notice from 30 September 2024 extended the IES until 31 December 2024. The Commission noted that the IES had been subject to at least eight extensions since the year 2020 including the three extensions submitted by the STL Group. Throughout the investigation, neither the GOI nor the sampled exporting producers had referred to the permanent discontinuation of the IES and as a result, the Commission could not verify for instance the impact of the discontinuation on the ongoing loans that benefit from the interest offset of the IES. Furthemore, in view of the large number of extensions in the past and the references found in the press in 2025 over the possibility of a new extension (19), the Commission rejected the request to remove the IES from the calculation of the benefits.

(76)

According to Article 6(b) of the basic Regulation, the benefit conferred on the recipient is the difference between the amount of interest that the company pays on the preferential loan and the amount that the company would pay for a comparable commercial loan obtainable on the Indian financial market (namely, the interest offset provided by the law). The amount of countervailable subsidies was therefore considered to be equal to the amount of interest relating to the IP offset by the RBI and thus saved by the STL and MP Birla groups.

(77)

In accordance with Article 7(2) of the basic Regulation, the Commission allocated this subsidy amount over the export turnover of the product under investigation during the IP as appropriate denominator because the subsidy is contingent upon export performance, and it was not granted by reference to the quantities manufactured, produced, exported or transported.

(78)

The subsidy rate established with regard to the scheme described above during the investigation period for the sampled groups of companies amounted to:

Interest equalization scheme for export financing

(79)

The AAS, RoDTEP and EPCGS are based on the Foreign Trade (Development and Regulation) Act 1992 (No 22 of 1992) which entered into force on 7 August 1992 (‘Foreign Trade Act’). The Foreign Trade Act authorises the GOI to issue notifications regarding the export and import policy. These are summarised in ‘Foreign Trade Policy’ documents, which are normally issued by the Ministry of Commerce and Industry every five years and updated as required.

(80)

The Foreign Trade Policy documents relevant for the investigation period are the Foreign Trade Policy 2015-20 (‘FTP 2015-20’) and the Foreign Trade Policy 2023 (20) (‘FTP 2023’). The FTP 2015-20 entered into force in April 2015 and was originally set to expire on 31 March 2020. However, due to the COVID-19 pandemic it was eventually extended until 31 March 2023. The FTP 2023 entered into force on 1 April 2023. The GOI also set out the procedures governing the FTP 2015-20 and FTP 2023 in the Handbook of Procedures 2015-20 (‘HOP 2015-20’) and the Handbook of Procedures 2023 (21) (‘HOP 2023’) respectively.

(81)

The DDS is based on Section 75 of the Customs Act of 1962, on Section 37 of the Central Excise Act of 1944, on Sections 93A and 94 of the Financial Act of 1994, and on the Customs, Central Excise Duties and Service Tax Drawback Rules of 1995, 2006 and 2017. The drawback rates are published and have been subject to changes overtime.

(82)

The Commission established that all sampled groups of exporting producers used RoDTEP during the investigation period. This scheme has already been countervailed in recitals (118) to (132) of the GES Regulation.

(83)

RoDTEP is provided in Chapter 4 of the FTP 2015-20 and, since 1 April 2023, in Chapter 4 of the FTP 2023.

(84)

Any manufacturer-exporter or merchant-exporter is eligible for this scheme.

(85)

Eligible companies can benefit from RoDTEP by exporting products which are not included in the list of ineligible Supplies/Items/Categories in Section 4.55 of the FTP 2023. According to this list, OFC was not excluded.

(86)

Under the scheme, eligible companies obtain a rebate which amounts to a certain percentage of the FOB value, with a value cap per unit, of the exported product. The rebate is provided in the form of a transferable electronic script (e-script), which is maintained in an electronic ledger by the Central Board of Indirect Taxes & Customs (CBIC). The e-scripts can be used for paying the custom duties of imported goods under the First Schedule to the Customs Tariff Act, 1975 viz. Basic Customs Duty.

(87)

RoDTEP rates are published in the form of Notifications. The RoDTEP rate for OFC in the IP was 1,5 % of FOB value with a cap of Rs. 11,3 per kg (net weight). Exporters are eligible to receive the lower of the two.

(88)

RoDTEP provides subsidies within the meaning of Article 3(1)(a)(ii) and Article 3(2) of the basic Regulation. RoDTEP e-scripts are financial contributions by the GOI, since the e-scripts will eventually be used to offset import duties paid on goods, thus decreasing the GOI’s duty revenue which would be otherwise due. In addition, RoDTEP e-scripts confer a benefit upon the exporter as it is not subject to the payment of those import duties.

(89)

Furthermore, as already established in recital (125) of the GES Regulation and stemming from Section 4.54 of the FTP 2023, RoDTEP is contingent in law upon export performance, and therefore deemed to be specific and countervailable under Article 4(4), first subparagraph, point (a) of the basic Regulation.

(90)

This scheme cannot be considered a permissible duty drawback system or substitution drawback system within the meaning of Article 3(1)(a)(ii) of the basic Regulation. It does not conform to the strict rules laid down in Annex I point (i), Annex II (definition and rules for drawback) and Annex III (definition and rules for substitution drawback) of the basic Regulation. An exporter is under no obligation to actually consume any goods imported free of duty in the production process and the amount of credit is not calculated in relation to actual inputs used. The e-scripts are not necessarily linked to actual payments of import duties on raw materials and is not a duty credit that can only be used to offset import duties on past or future imports of raw materials. There is no system or procedure in place to confirm which inputs are consumed in the production process of the exported product or whether an excess payment of import duties occurred within the meaning of point (i) of Annex I and Annexes II and III of the basic Regulation.

(91)

Moreover, for six out of the seven exporting producers, no further examination by the GOI was conducted on the basis of actual inputs and transactions in order to determine whether an excess payment occurred. During the verification visit, the Commission asked the GOI if they intended to conduct further examinations as regards this and other schemes, to which the GOI replied that they had no further plans. Thus, the Commission did not request the GOI to conduct further examination of the transactions at issue. For one exporting producer within the STL group, the GOI carried out a verification at the request of the company for the purpose of this investigation. As regards the procedure of this verification process, the written notification of the GOI to the exporting producer for the on-site visit was issued several days after the actual visit of the GOI to the exporting producer and the verification report had the same date as the date of the verification visit of the Commission team to the GOI. As regards the substance of the verification report of the GOI, the calculations shown in the report used the total amounts of inputs and exports but did not trace, and therefore establish, which actual inputs (domestic or imported) had been used for manufacturing actual exported products.

(92)

The investigation therefore established that the verification carried out by the Indian authorities were not sufficient to prevent a benefit and that RoDTEP, as used in the case at hand, cannot be considered a permissible duty drawback system.

(93)

In accordance with Article 3(2) and Article 5 of the basic Regulation, the Commission calculated the amount of countervailable subsidies in terms of the benefit conferred on the recipient, which was found to exist during the investigation period. In this regard, the Commission established that the benefit is conferred on the recipient at the time when the company receives the benefit under this scheme. At that moment, the GOI issued an e-script which was booked by the exporting producers as an account receivable which can be offset by these companies at any moment for paying custom duties on any import or by transferring the e-script(s) to another company. This constitutes a financial contribution within the meaning of Article 3(1)(a)(ii) of the basic Regulation. Once the custom authorities issue an export shipping bill, the GOI has no discretion as to whether or not to grant the subsidy. In the light of the above, and since there was no reliable evidence showing otherwise, the Commission considered appropriate to assess the benefit under the RoDTEP as being the sum of the amounts earned on export transactions made under this scheme during the investigation period by the exporting producers. The Commission took into account the RoDTEP amounts earned on all the reported export transactions of the product under investigation by all three sampled groups of exporting producers.

(94)

Following definitive disclosure, the GOI, supported by HFCL and STL (without making their own claims), claimed that RoDTEP should not be countervailed. In particular, the GOI claimed that (i) the Commission has failed to calculate whether there had been any excess remission; (ii) the GOI had submitted evidence, without specifying what and when, that the RoDTEP rates are much lower than the actual level of taxes and duties borne by exporters; and (iii) the GOI has a ‘sufficient’ verification system in place including a requirement put in place on 23 October 2024 that will require exporters to submit to the GOI annual reports on RoDTEP.

(95)

As regards the first claim, the Commission noted that, absent a traceability system, it could not link the imported inputs to the exported products and therefore the duties paid for those imported inputs could not be taken into account for the calculation of the benefit. As regards the second claim, the Commission verified again the evidence submitted by the GOI and in particular, the verification report indicated in recital (91) above. The evidence showed that the files used by the GOI to produce the report, several of which were worksheets, had not been verified on-the-spot by the GOI, since the GOI asked for those files to the exporting producer days after having conducted the verification visit. The Commission did not therefore consider such unverified data reliable. As regards the third claim, the Commission noted that the new reporting obligation was introduced more than one year after the end of the IP and therefore could not be used to verify the data in this case. As a result, the Commission established as excess remission the total amount of drawback received. Therefore, the claim was rejected.

(96)

In accordance with Article 7(2) and (3) of the basic Regulation, the Commission allocated this subsidy amount over the export turnover of the product under investigation of the three sampled groups of exporting producers during the investigation period as appropriate denominator, because the subsidy is contingent upon export performance, and it was not granted by reference to the quantities manufactured, produced, exported or transported.

(97)

The subsidy rate established with regard to the scheme described above during the investigation period for the sampled groups of companies amounted to:

Remission of Duties and Taxes on Exported Products

(98)

The Commission established that the HFCL, STL and MP Birla groups used AAS during the investigation period. This scheme has been countervailed in a number of countervailing duty proceedings concerning India, including in recitals (28) to (55) of the GES Regulation, in recitals (126) to (153) of the stainless steel cold-rolled flat products (22) (‘the SSCR Regulation’), in recitals (39) to (61) of the polyethylene terephthalate Regulation (23) (‘the PET Regulation’) and in recitals (40) to (60) of the stainless steel bars and rods Regulation (24) (‘the SSBR Regulation’).

(99)

The detailed description of the scheme is contained in Chapter 4 of the FTP 2015-20 and FTP 2023 and in Chapter 4 of the HOP 2015-20 and HOP 2023.

(100)

Pursuant to paragraph 4.05 of the FTP 2023, advanced authorisation licences can be issued either to manufacturer-exporters or to merchant exporters tied to supporting manufacturers.

(101)

Advanced authorisation licences can be issued for physical exports, for intermediate supplies, for the supply of certain goods and for deemed exports.

(102)

Applicants need to apply for a licence which would allow importing duty-free inputs and where the volume of these imports should not exceed the volume of inputs for manufacturing exported products. There are different types of licences, and notably the following ones.

(103)

First, SION-based licences. The Directorate-General of Foreign Trade publishes sector-wide Standard Input-Output Norms (SIONs). A SION prescribes the quantities of input required to manufacture a unit of a certain product. The SIONs are established by the Norms Committee, which is an inter-ministerial technical body comprising of scientists and technical experts from a given field. The SIONs are established based on the information submitted by export promotion councils, by other authorities and by the manufacturers of the relevant products.

(104)

Second, self-declaration or self-ratification-based licences. Applicants may apply for this type of licences where neither SIONs nor Ad-hoc norms are available or where SIONs are available, but the exporter intends to use additional inputs in the manufacturing process. In such cases, as opposed to SIONs, AAS licences are granted based on the individual consumption norms of the applicant. The applicant submits an application, certified by a chartered engineer, to the Norms Committee providing the details of the inputs sought to be imported and the company’s consumption norms, certified by a chartered accountant, for such inputs. Once examined and approved by the Norms Committee, these norms are published as Ad-hoc norms. In case of self-ratification-based licences, regional authorities may issue AAS licences without the norms having to be ratified by the Norms Committee. However, such licences are only provided to Authorised Economic Operators (‘AEO’) certificate holders, which are usually established exporters with a proven track-record. An application for a self-ratification based licence has to include a Certificate from a Chartered Engineer.

(105)

AAS licences indicate the import allowance and the export obligation. Imported input materials are not transferable and have to be used to produce the resulting export product. Applicants may apply for licences where the export obligation is applicable to each product listed in the licence. Where SIONs or ad hoc norms exist for an exported product, applicants may apply for licences where the holder may achieve the export obligation by exporting any combination of the exported products listed in the licence.

(106)

Licence-holders have 12 months to import the inputs and 18 months to export the manufactured products. The GOI may grant extensions to these deadlines upon requests by the licence-holder.

(107)

For verification purposes by the Indian authorities, and according to Chapter 4.51 HOP 2023, an AAS licence-holder is legally obliged to maintain ‘a true and proper account of consumption and utilisation of duty-free imported/domestically procured goods’ in a specified format (the so-called Appendix 4H). An external chartered accountant must certify that the information provided in Appendix 4H is true and correct.

(108)

Indian legislation prohibited that export transactions claimed under AAS, could receive benefits under RoDTEP or DDS.

(109)

The sampled exporting producers used SION-based licences, self-declaration and self-ratification-based licences.

(110)

The Commission further investigated whether the GOI has in place and applies an effective verification system or procedure to confirm which inputs were consumed in the production of the exported product and in what amount.

(111)

The Commission checked for several licences and for several exported optical fibre cables, the accuracy of the SION and company-based norms to match input quantities to exported manufactured products. The verification showed that, in several instances, the quantity of OF stipulated in the SION or company-based standards, reconciled with the quantity of OF stipulated in the bill of material (‘BOM’) of the exporting producer. However, in one instance involving a licence based on company standards, the quantity stipulated by the BOM was around 89 % higher than the quantity stipulated in the licence. For the other input materials, the deviations were significant. For instance, in one licence based on company standards, the quantity stipulated in the BOM for the input material HDPE black compound, was nearly 2 500 % higher than the quantity stipulated in the licence. During the verification visit, the exporting producers explained that the deviations involving input materials other than OF, were due to the fact that the exported products listed in the licence were actually a basket of a large number of actual products manufactured and exported.

(112)

However, the investigation revealed that the mechanisms described in recital (111) aim at reconciling volumes but do not aim at ensuring the physical incorporation of the imported inputs into the exported goods.

(113)

Furthermore, the investigation revealed that for a very few licences, the sampled exporting producers submitted to the GOI applications for closing those licences after the companies had considered that they had reached the exporting obligations. The application included the completed Appendices 4H. The purpose of Appendix 4H is to present the consolidation of the volumes of imported inputs and the volumes of exported goods. The exporting producers that had completed these Appendices 4Hs had used the purchases registry to record the inputs that had been imported under AAS and used an internal tracking file to record the exports under each licence. Under AAS, the GOI licence-holder needs to match the quantities of the imports to the quantities of the export products by using the norms prescribed in the licences, which as indicated in recitals (103) and (104), may have been based on SION, self-declared or self-ratified. The GOI has not yet however closed those licences and therefore has not formally verified them. For all the other licences, the exporting producers did not have available Appendices 4H. Therefore, as the exporting producers have only a limited number of completed Appendices 4H and the GOI has not verified the very few Appendices 4H that have been completed, the Commission was not able to check whether the GOI has in place and applies a system or procedure to confirm which inputs were consumed in the production of the exported product and in what amount.

(114)

Furthermore, during the verification visit, one sampled exporting producer explained that exported products are allocated to a particular licence when the name of such product in the exporting invoice fits into the product basket covered by the licence. That is, the allocation is not done on the basis of which actual batches of imported inputs were used in a given exported product. The AAS cannot therefore prevent that exporting producers replace the imported inputs with domestically produced inputs in the manufacturing process.

(115)

Another sampled exporting producer indicated that the domestically produced inputs are of equivalent characteristics as those of imported inputs and that therefore, substitution of imported inputs with domestically manufactured inputs into exported OFC would be an acceptable practice. However, the investigation showed that no sampled exporting producer requested permission to the GOI to carry out such a substitution practice, which would have required an assessment by the GOI in this regard.

(116)

The investigation further revealed that the GOI had not carried out a verification until there were specific verification requests for the purpose of the current anti-subsidy investigation by the three sampled exporting groups of producers. As a consequence, one exporting producer of the STL Group and two exporting producers of the MP Birla Group were verified by the GOI. The HFCL group was not verified by the GOI.

(117)

During the verification visit of the GOI, the GOI submitted its verification reports of the three exporting producers mentioned in recital (116). These verification reports had the date of 10 December 2024 which was one of the days of the verification visits of the Commission to the GOI for the current anti-subsidy investigation. During the verification visit to the GOI, the Commission asked if the GOI intended to carry out further examinations to which the GOI replied that they had no further plans.

(118)

As regards the procedure of the verification process of the GOI, in one instance, the GOI notified by email the respective exporting producer of the verification visit on the same day as the GOI carried out the verification visit. Furthermore, the evidence supporting the relevant information that was supposed to be verified by the GOI during its verification visit was sent to the GOI only after its verification visit had taken place. In another instance, although the GOI told the Commission that the GOI investigator did not have exchanges with the company after the visit, the evidence used by the GOI to prepare the verification report included screenshots taken between 15 to 17 days after the GOI’s verification visit.

(119)

As regards substance, the verification reports did not refer to any evidence to support the fact that the inputs for which the import duty was remitted were consumed in the production process of the exported products, nor that the exporting producers were tracing the physical incorporation of actual imports into the actual exported good. There was also no evidence that the verification dealt with the substitution of imported inputs with domestically produced inputs.

(120)

Therefore, the procedure and the content of the GOI’s verification system as described in recitals (117) to (119) show that such system or procedure are not effective for the intended purpose. First, the GOI did not close all AAS licences and hence did not verify the respective imported inputs and exported products as possible. Second, the GOI did not carry out a verification visit to all exporters but only to two out of three, and only at the specific request of these exporters in light of the ongoing countervailing duty proceeding. Third, even the verification procedures carried out showed that there was no evidence that the GOI actually requested and checked evidence underlying the raw data submitted by the exporters.

(121)

The Commission also tried to verify the ability of the exporting producers to demonstrate that the actual imported inputs were physically incorporated in the manufacturing process of the exported goods in their accounting system.

(122)

One sampled group of exporting producer was not able to use its internal system to trace the physical incorporation of the imported inputs into the exported OFC.

(123)

For the other two sampled group of exporting producers due to the constraints of the internal systems used by the sampled exporting producers, the Commission was only able to sample an insignificant volume of imported inputs and tried to trace it to the exported goods. Therefore, this verification process did not render any representative result.

(124)

Based on the above, it was concluded that the verification system by the GOI was not effective and reasonable to ensure that the import duty remitted on imports of inputs under the AAS was actually used in the production of the exported product. Likewise, the sampled exporting producers could themselves not show that the imported inputs were used in the production of the exported products. As the GOI had indicated that they did not intend to carry out further verifications, the Commission maintained its conclusions.

(125)

In line with previous cases and in view of the findings in the previous section, the exemption from import duties under this scheme is a subsidy within the meaning of Article 3(1)(a)(ii) and Article 3(2) of the basic Regulation. It constitutes a financial contribution of the GOI since it foregoes duty revenue which would otherwise be due and it confers a benefit upon the investigated exporters since it improves their liquidity.

(126)

In addition, AAS is contingent in law upon export performance, and therefore deemed to be specific and countervailable under Article 4(4), first subparagraph, point (a) of the basic Regulation. Without an export commitment, a company cannot obtain benefits under this scheme.

(127)

The AAS cannot be considered a permissible duty drawback system or substitution drawback system in the case at hand within the meaning of Article 3(1)(a)(ii) and Annexes II and III of the basic Regulation. It does not conform to the rules laid down in Annex I item (i), Annex II (definition and rules for drawback) and Annex III (definition and rules for substitution drawback) of the basic Regulation. As established in recitals (110) to (124), the GOI did not apply an effective and reasonable verification system or a procedure to confirm whether, and in what amounts, inputs were consumed in the production of the exported product (Annex II(4) and (5) of the basic Regulation and, in the case of substitution drawback schemes, Annex III(II)(2) of the basic Regulation). Furthermore, not-withstanding the flaws indicated in recital (111), the SIONs and company-based norms aim at matching overall quantities but cannot constitute a verification system of actual consumption because they do not allow establishing if the actual imported inputs are substituted by domestic ones in the manufacturing of the actual export products. In view of Annex II(5) and Annex III(II)(3) to the basic Regulation, and although the GOI had carried out verifications at two exporting producers, the verifications did not confirm that the actual imported inputs were used in the export goods.

(128)

The scheme is therefore countervailable.

(129)

Following definitive disclosure, the GOI disagreed with the Commission’s conclusion regarding the effectiveness of the GOI verification system. In particular, the GOI submitted that the Commission should not draw negative inferences from the fact that the verificaction was requested by the exporting producers.

(130)

The Commission noted that recital (116) simply stated the fact that the GOI did not carry out any verification until the verification requests from the exporting producers for the purposes of this anti-subsidy investigation. The Commission’s conclusion on the effectiveness of the verification system was not based on this fact and was drawn in detail in recital (120) on the basis of the arguments laid down in recitals (117) to (119). Therefeore, the Commission rejected the claim.

(131)

In light of the above conclusion on the AAS, the total amount of custom duties foregone constitutes a countervailable subsidy in accordance with Article 3(1)(a)(ii) of the basic Regulation. The application fees paid by the exporting producers have been deducted.

(132)

In accordance with Article 7(2) of the basic Regulation, the Commission allocated these subsidy amounts received over the total export turnover of the product under investigation of each exporting producer during the IP period as appropriate denominator, because the subsidy is contingent upon export performance and it was not granted by reference to the quantities manufactured, produced, exported or transported.

(133)

Following definitive disclosure, the HFCL Group and the GOI (whose arguments were supported by the STL Group), claimed first that, in line with the WTO Appelate Body’s report in the EU-PET (Pakistan) case (25), even if the Commission finds the verification system of the GOI ineffective, the Commission must determine the excess remission based on the records of the exporting producers. Second, the HFCL Group referred to the Agreement on Subsidies and Countervailing Measures (‘ASCM’) to claim that only the excess remission of import charges can be countervailed and that imports can be replaced by home market inputs with the same quality and characteristics and submitted figures to claim that there were no excess remissions for the HFCL Group. Third, the HFCL Group also claimed that, stemming from the WTO Appelate Body’s report in the EU-PET (Pakistan) case, the Commission should have used facts available to calculate if there were excess remissions, notably as regards the traceability analysis conducted during the verification visit, the BOM collected during the verification visit and the data submitted by the HFCL Group in reply to the second deficiency letter concerning the minimum consumption of optical fibre for manufacturing the PUI.

(134)

The Commission noted that it based its conclusions on the facts verified during the investigation to determine the countervailable amount. The Commission, in line with Annex II, point 6 of the basic Regulation, assessed if the imported inputs had been physically incorporated in the exported product. To that end, and as described in recitals (110) to (124) above, the Commission assessed, among other elements, the verification system, the potential substitution of imports by domestic products, the recipes provided in the licences against the BOMs and the tracing capabilities of the accounting systems of the sampled exporting producers. The Commission therefore used the facts collected during the investigation to establish whether the imported inputs had been physically incorporated in the exported products. The conclusions reached (recital (127) above) were that there was no evidence that imports were physically incorporated in the exported product and as a result, the Commission has concluded that the excess remission in this case was the total amount of import duties foregone. The Commission notes that a similar conclusion was reached in the SSCR case. Furthermore, as already explained in this recital, the Commission countervailed the excess remission. The Commission also examined the issue of substitution in recital (115) above. Therefore, the Commission rejected the claims.

(135)

Following definitive disclosure, the HFCL Group claimed that the Commission had not been consistent with the findings in its previous cases following the WTO Appelate Body’s report in the EU-PET (Pakistan). In particular, the HFCL Group noted that in the PET (India) case, the Commission calculated the excess remissions as the difference between actual consumption and SION. The HFCL Group further claimed that the Commission’s findings in the SSCR case were not relevant in the case at hand since in SSCR (i) there was no close nexus between the imported inputs and the exported products; (ii) the imported materials could also be used in products other than the PUI; and (iii) no evidence of computation of excess remission had been provided.

(136)

The Commission disagreed with the claim. As in PET (India) and SSCR, the Commission had calculated the excess remissions as explained in recital (134) above. Similarly as in SSCR, where it could not establish a link between the imported inputs and the exported products, the Commission, on the basis of the facts collected during the investigation, did not find evidence that the the imported inputs had been physically incorporated in the exported products. Therefore, the claim was rejected.

(137)

The subsidy rate established with regard to the scheme described above during the investigation period for the sampled groups of companies amounted to:

Advance Authorization Scheme

(138)

The Commission established that all three sampled groups used DDS during the investigation period. This scheme has already been countervailed in a number of countervailing duty proceedings concerning India, including in recitals (92) to (116) of the GES Regulation, in recitals (154) to (173) of the SSCR Regulation, in recitals (103) to (132) of the spheroidal graphite cast iron Regulation (26) (‘the SGCI Regulation’), in recitals (39) to (61) of the polyethylene terephthalate Regulation (27) (‘the PET Regulation’) and in recitals (61) to (76) of the stainless steel bars and rods Regulation (28) (‘the SSBR Regulation’).

(139)

The legal basis applicable during the review investigation period was the Custom & Central Excise Duties Drawback Rules 1995 (29) (‘the 1995 DDS Rules’), as amended in 2006 (30) and then replaced by the Customs and Central Excise Duties Drawback Rules, 2017 (31) (‘the 2017 DDS Rules’) which entered into force on 1 October 2017.

(140)

The Government has made several amendments, including the rates, via Notification No 95/2018 and Notification No 07/2020. For the product under investigation, the DDS rate during the IP was 1 % of the FOB value of the exported OFC.

(141)

Any manufacturer-exporter or merchant-exporter exporting eligible products is eligible for this scheme.

(142)

Under this scheme, any company exporting eligible products is entitled to receive an amount corresponding to a percentage of the declared FOB value of the exported product.

(143)

As already established in the Commission Regulations indicated in recital (138) above and stemming from Sections 2 and 3 of the 2017 DDS rules, in order to be eligible to benefit from this scheme, a company must export. The exporter must indicate that the export product falls under DDS when entering the shipment details in the Customs’ portal. The DDS amount is then irrevocably fixed when the GOI issues the shipping bill which would then trigger the payment of the DDS amount to the exporter.

(144)

Indian legislation does not require that the exporter requesting the DDS will incur a customs duty liability for imports of the raw materials needed for the manufacture of the exported product. In fact, the DDS amount can be used for any purpose.

(145)

Indian legislation allowed companies to claim benefits under DDS and RoDTEP for the same export transaction. In that case, companies could not however claim those export transactions under AAS.

(146)

During the verification visit to the GOI, the Commission asked if the GOI intended to carry out further examinations, to which the GOI replied that they had no further plans.

(147)

The DDS provides subsidies within the meaning of Article 3(1)(a)(i) and Article 3(2) of the basic Regulation. The DDS amount is a financial contribution by the GOI as it takes the form of a direct transfer of funds by the GOI. There are no restrictions as to the use of these funds. In addition, the DDS amount confers a benefit upon the exporter, because it improves its liquidity.

(148)

The rate of DDS for exports is determined by the GOI on a product-by-product basis. However, although the subsidy is referred to as a duty drawback, the scheme does not have all the characteristics of a permissible duty drawback system or substitution drawback system within the meaning of Article 3(1)(a)(ii) of the basic Regulation; nor does the scheme conform to the rules laid down in Annex I item (I), Annex II (definition and rules for drawback) and Annex III (definition and rules for substitution drawback) of the basic Regulation. The cash payment to the exporter is not necessarily linked to actual payments of import duties on raw materials and is not a duty credit to offset import duties on past or future imports of raw materials. In addition, there is no system or procedure in place to confirm which inputs are consumed in the production of the exported products and in what amounts. Finally, the GOI did not carry out a further examination based on actual inputs involved, although this would need to be carried out in the absence of an effectively applied verification system (Annex II(5) and Annex III(II)(3) to the basic Regulation).

(149)

Following definitive disclosure, the GOI (whose arguments were supported by the STL Group), disagreed with the Commission’s conclusion as regards the verification system and claimed that the DDS was not a countervailable subsidy. In particular, the GOI submitted that their verification system was robust and referred to various rules in place including the DDS rules from 1995 and 2017.

(150)

The Commission noted that the GOI did not submit new evidence as regards the verification system to call into question the Commission’s conclusions. Those findings (that the DDS is a countervailable subsidies and that its verification system is ineffective) are in line with the factual conclusions also reached in previous cases, such as PET and SSCR. Therefore, the Commission rejected the claim.

(151)

The payment by the GOI following the exports made by exporters is contingent upon export performance and therefore this scheme is deemed to be specific and countervailable under Article 4(4) first subparagraph, point (a) of the basic Regulation. As the GOI had replied to the Commission that they did not intend to carry out further examinations, the Commission maintained its conclusions.

(152)

In view of the above, it is concluded that the DDS is countervailable.

(153)

In accordance with Article 3(2) and Article 5 of the basic Regulation, the Commission calculated the amount of countervailable subsidies in terms of the benefit conferred on the recipient, which was found to exist during the IP. In this regard, the Commission established that the benefit is conferred on the recipient at the time when an export transaction is made under this scheme. At this moment, the GOI is liable for the payment of the DDS amount, which constitutes a financial contribution within the meaning of Article 3(1)(a)(i) of the basic Regulation. Once the custom authorities issue an export shipping bill which shows, inter alia, the amount of DDS which is to be granted for that export transaction, the GOI has no discretion as to whether or not to grant the subsidy.

(154)

In the light of the above, the Commission considered appropriate to assess the benefit under the DDS as being the sum of the DDS amounts earned on export transactions made under this scheme during the IP. The Commission took into account the DDS amounts earned on all the export transactions of the product under investigation.

(155)

Following definitive disclosure, the GOI (whose arguments were supported by the STL Group), claimed that, in line with the WTO Appelate Body’s report in the EU-PET (Pakistan) case, even if the Commission finds the verification system of the GOI ineffective, the Commission must determine the excess remission based on the records of the exporting producers. Furthermore, the GOI claimed that there were no excess remissions in this case.

(156)

The Commission noted that the exporting producers did not submit evidence that they had paid duties for the imported inputs physically incorporated in the exported product for which the drawback amount was received. As a result, the Commission deemed appropriate to establish as excess remissions the total amount of drawback received. Therefore the claim was rejected.

(157)

In accordance with Article 7(2) of the basic Regulation, the Commission allocated these subsidy amounts over the total export turnover of the product under investigation of each exporting producer during the IP as appropriate denominator, because the subsidy is contingent upon export performance and it was not granted by reference to the quantities manufactured, produced, exported or transported.

(158)

The subsidy rate established with regard to the scheme described above during the investigation period for the sampled groups of companies amounted to:

Duty Drawback Scheme

(159)

The Commission established that the HFCL and STL groups used EPCGS during the investigation period. This scheme has already been countervailed in a number of countervailing duty proceedings concerning India, including in recitals (79) to (90) of the GES Regulation, in recitals (174) to (189) of the SSCR Regulation, in recitals (82) to (93) of the PET Regulation and in recitals (86) to (102) of the SGCI Regulation.

(160)

The detailed description of the EPCGS is provided in Chapter 5 of the FTP 2015-20 and Chapter 5 of the FTP 2023 as well as in Chapter 5 of the HOP 2015-20 and Chapter 5 of the HOP 2023.

(161)

Manufacturer-exporters, merchant-exporters ‘tied to’ supporting manufacturers and service providers are eligible for this measure.

(162)

Under the condition of an export obligation, eligible companies are allowed to import capital goods (new and second-hand capital goods up to 10 years old) at a reduced duty rate. To this end, the GOI issues, upon application and payment of a fee, an EPCGS licence. The scheme provides for a reduced import duty rate applicable to all capital goods imported under the scheme. As required under paragraphs 5.01(b) and 5.04(a) of the FTP 2023, the export obligation requires the beneficiary to export the manufactured goods for which the licence was issued in an amount which is equivalent to 6 times the duties, taxes and cess saved on the imported capital goods within 6 years from the date the licence was issued. Under the FTP 2015-20 and FTP 2023, the capital goods can be imported with a 0 % duty rate under the EPCGS. The export obligation, which amounts to six times the duty saved, must be fulfilled within a maximum period of six years.

(163)

The EPCGS provides subsidies within the meaning of Article 3(1)(a)(ii) and Article 3(2) of the basic Regulation. The duty reduction constitutes a financial contribution by the GOI, since the duty reduction decreases the GOI’s duty revenue which would be otherwise due. In addition, the duty reduction confers a benefit upon the exporter, because the duties saved upon importation improve the company’s liquidity.

(164)

Furthermore, the EPCGS is contingent in law upon export performance, since such licences cannot be obtained without a commitment to export. Therefore, it is deemed to be specific and countervailable under Article 4(4), first subparagraph, point (a) of the basic Regulation.

(165)

The EPCGS cannot be considered a permissible duty drawback system or substitution drawback system within the meaning of Article 3(1)(a)(ii) of the basic Regulation. Capital goods are not covered by the scope of such permissible systems, as set out in Annex I point (I), of the basic Regulation, because they are not consumed in the production of the exported products.

(166)

The amount of countervailable subsidies was calculated, in accordance with Article 7(3) of the basic Regulation, on the basis of the unpaid customs duty on imported capital goods spread across a period which reflects the normal depreciation period of such capital goods in the industry concerned. The amount so calculated, which is attributable to the IP, has been adjusted by adding interest during this period in order to reflect the full time value of the money. The commercial interest rate (32) during the investigation period in India was considered appropriate for this purpose.

(167)

Following definitive disclosure, the Commission, as a result of the claim from the MP Birla Group indicated in recital (55), changed the benchmark of the commercial interest rate as indicated in recital (56) above.

(168)

In accordance with Article 7(1)(a) of the basic Regulation, fees incurred by the companies to obtain the subsidy were deducted from the total subsidy amount where claimed.

(169)

In accordance with Article 7(2) and 7(3) of the basic Regulation, this subsidy amount has been allocated over the export turnover of the product under investigation during the IP as the appropriate denominator because the subsidy is contingent upon export performance and was not granted by reference to the quantities manufactured, produced, exported or transported.

(170)

The subsidy rate established with regard to the scheme described above during the investigation period for the sampled groups of companies amounted to:

Export promotion of capital goods scheme

(171)

The Commission established that all three sampled groups of exporting producers used IGCRS during the investigation period.

(172)

The scheme was first introduced in 1996 (33) and was subject to major amendments in 2016 (34), 2017 (35) and 2022 (36) (‘the 2022 IGCRS rules).

(173)

The scheme is available to manufacturers, providers of output services and to any importer using the relevant imported good for an intended end-use.

(174)

The eligible imports and the boundaries for the intended end-uses are provided in the table in Notification 50/2017-Customs. The GOI indicated during the Commission’s verification visit, that companies importing goods for trading purposes, would not be eligible.

(175)

The scheme allows eligible companies to obtain a duty reduction for imported inputs and capital goods. The reduced rates are laid down in exemption notifications issued under Sub-section (1) of Section 25 of the Customs Act, 1962.

(176)

Companies interested in benefiting from the reduced rate must submit an application through the Customs’ portal. When applicants are producers the required information in the application includes, inter alia, the products manufactured and the intended use of the imported goods in the manufacturing process. Applicants must also provide a financial guarantee in the form of a secured continuity bond. To benefit from the reduced import duty rate, applicants should provide their identification number and the details of the continuity bond when filing the bill of entry for the imported goods.

(177)

Eligible companies must keep a record of the use of the imported goods and submit monthly statements of their consumption to the Customs’ authorities. If the imported goods are not used as specified, or if there are any discrepancies, the customs authorities can recover the difference between the reduced import duty paid and the standard duty rate.

(178)

Imported goods can be used for both the production of exported products and of products to be consumed in the domestic market.

(179)

The IGCRS provides subsidies within the meaning of Article 3(1)(a)(ii) and Article 3(2) of the basic Regulation. The duty reduction constitutes a financial contribution of the GOI since it foregoes duty revenue which would otherwise be due and it confers a benefit since it improves the liquidity of the recipients.

(180)

The IGCRS is also deemed to be specific as its eligibility is limited by law, for instance by the table in Notification 50/2017-Customs as indicated in recitals (173) (174) above to certain importers and therefore countervailable under Article 4(2), point (a) of the basic Regulation.

(181)

The amount of countervailable subsidies was calculated, in accordance with Article 7(2) of the basic Regulation, on the basis of the unpaid custom duties on imported goods. Where IGCRS was used in the purchase of imported capital goods, the unpaid customs duty on imported capital goods spread across a period which reflects the normal depreciation period of such capital goods in the industry concerned. The amount so calculated, which is attributable to the IP, has been adjusted by adding interest during this period in order to reflect the full time value of the money. The commercial interest rate (37) during the investigation period in India was considered appropriate for this purpose.

(182)

Following definitive disclosure, the Commission, as a result of the claim from the MP Birla Group indicated in recital (55), changed the benchmark of the commercial interest rate as indicated in recital (56) above.

(183)

Following definitive disclosure, the MP Birla Group raised the claim indicated in recital (59) also in relation to IGCRS. The Commission rejected it on the same grounds indicated in recitals (60) to (62) for M-SIPS.

(184)

The STL and MP Birla groups also used this scheme to support the manufacturing of input materials. Therefore, the Commission apportioned the appropriate amount of benefit to the OFC manufacturers which was then used in the calculation of the countervailable subsidy amount on the basis of the method described in recital (181) above.

(185)

In accordance with Article 7(2) of the basic Regulation, the Commission allocated these subsidy amounts over the total turnover of the product concerned of the relevant exporting producers during the investigation period as appropriate denominator.

(186)

The subsidy rate established with regard to the scheme described above during the investigation period for the sampled groups of companies amounted to:

Import of Goods at Concessional Rate of Duty Scheme

(187)

The Commission established that the STL Group used support schemes granted by the State of Maharashtra during the investigation period.

(188)

The legal basis applicable during the IP was the 2016 Maharashtra Electronics Policy and the 2019 Maharashtra Package scheme of incentives (38).

(189)

Manufacturing enterprises, large scale industries and mega and ultra mega projects are eligible. The schemes are open to certain sectors including electronic systems design & manufacturing and semiconductor fabrication. The investments proposed by the STL Group qualified as mega projects.

(190)

The 2016 Maharashtra Electronics Policy includes several support schemes such as power tariff subsidies, investment subsidies, the refund of the employer’s contribution to the Employee’s State Insurance or the refund of various duties and taxes.

(191)

Prior to the investment, the companies must submit an application to the State of Maharashtra.

(192)

If the application is approved, the State of Maharashtra sends to the applicant a letter called ‘eligibility certificate’ listing the eligible schemes and the amounts which the applicant can claim. For mega projects, the State of Maharashtra may offer subsidies tailor made to the applicant on the basis of the support schemes indicated in recital (190).

(193)

Once the State of Maharashtra has sent to the applicant the eligibility certificate, the applicant needs to submit individual payment claims for each of the subsidy schemes offered but not necessarily for all of them.

(194)

The schemes from the State of Maharashtra constitute subsidies within the meaning of Article 3(1)(a)(i) and Article 3(2) of the basic Regulation. The disbursements are financial contributions by the State of Maharashtra, since the State of Maharashtra makes a direct transfer to the beneficiary. In addition, these payments confer a benefit since the beneficiary gets a compensation for part of the investment it has carried out.

(195)

These schemes are also deemed to be specific as its eligibility is limited, as explained in recital (189), to companies investing in the State of Maharashtra, and therefore countervailable under Article 4(3) of the basic Regulation. Furthermore, Section 2.3 of the 2019 Maharashtra Package scheme of incentives states that the State government has identified 15 ‘thrust’ sectors with a view of steering industrial development towards high-tech emerging sectors. In addition, very large projects such as those qualifying as ‘mega-projects’, are subject to benefit from tailor-made incentives by the State of Maharashtra. The Commission therefore found the scheme countervailable under Article 4(2), point (a) of the basic Regulation.

(196)

Following definitive disclosure, the STL Group claimed that the scheme was not specific. According to the STL Group, this was because the granting authority was the State of Maharashtra and the incentives were available to nearly all manufacturing companies in the State of Maharashtra, as long as they met objective criteria, which were economic in nature and horizontal in application, in line with Article 4(2)(b) of the basic Regulation. The STL Group specified that, upon meeting certain investment thresholds in the State of Maharashtra, the eligibility for the funding was automatic upon presentation of an application. Notably, the STL Group did not eventually apply for schemes for which it had not reached the required investment threshold.

(197)

The Commission noted that, without prejudice as to whether the scheme was specific on the basis of the geographical scope, the scheme was still considered specific because it was not available to all industries. The Commission noted that the list of industries for which this scheme is applicable, excludes for example the whole primary agricultural sector (only the processing of agri-food products was eligible (39)). Furthermore, the Commission noted that the benefits granted were neither automatic nor pre-determined. Indeed, as found in recital (192) above, for mega projects – as the investment by the STL Group was classified – the State of Maharashtra ‘may consider providing customized package of incentives on [a] case-to-case basis as deemed necessary’ (40). During the verification visit by the Commission, the STL Group confirmed that its project was classified as a mega-project and was offered such tailor-made benefits. Therefore, the fact that incentives were tailor made for mega-projects, such as the STL’s project, confirmed that the benefit was indeed subject to discretion and not automatic as claimed by the company. Therefore, this claim was rejected.

(198)

The investigation revealed that the STL group benefited from power tariff subsidies, investment subsidies and the refund of the employer’s contribution to the Employee’s State Insurance for investments for manufacturing OFC, glass preform (an upstream input to OF), and OF (an upstream input to OFC).

(199)

The amount of countervailable subsidies was calculated, in accordance with Article 7(3) of the basic Regulation, on the basis of the amount granted by the State of Maharashtra to the beneficiaries. For those subsidies consisting in investment subsidies, the total amount was spread across a period which reflects the normal depreciation period of such capital goods in the industry concerned. The Commission established that the benefit is conferred to the recipient at the time when the beneficiaries accrued the amounts resulting from the eligibility certificates received from the State of Maharashtra. For investment subsidies, the amount calculated, which is attributable to the IP, has been adjusted by adding interest during this period in order to reflect the full-time value of the money. The commercial interest rate (41) during the investigation period in India was considered appropriate for this purpose.

(200)

Following definitive disclosure, the Commission, as a result of the claim from the MP Birla Group indicated in recital (55), changed the benchmark of the commercial interest rate as indicated in recital (56) above.

(201)

The STL group also used this scheme to support the manufacturing of input materials. Therefore, the Commission apportioned the appropriate amount of benefit to the OFC manufacturers which was then used in the calculation of the countervailable subsidy amount on the basis of the method described in recital (199).

(202)

In accordance with Article 7(2) and 7(3) of the basic Regulation, this subsidy amount has been allocated over the turnover of the product under investigation during the IP because the companies used the assets only for producing the product under investigation and because the subsidy was not granted by reference to the quantities manufactured, produced, exported or transported.

(203)

The subsidy rate established with regard to the scheme described above during the investigation period for the sampled groups of companies amounted to:

Schemes from the State of Maharashtra

(204)

The Commission established that the HFCL group used support schemes granted by the State of Telangana during the investigation period.

(205)

The legal basis applicable during the IP was the 2016 Telangana Electronics Policy (42).

(206)

The eligibility is restricted, pursuant to Section 6.2 of the 2016 Telangana Electronics Policy, to the electronics industry in Telangana. Page 11 of the same document defines electronics industry as Electronic Products, Electronic Manufacturing Services, Semiconductor & VLSI design and Electronic Components.

(207)

The 2016 Telangana Electronics Policy includes several support schemes such as investment subsidies, interest subsidies, power subsidies, transport subsidies or the refund of various taxes and duties.

(208)

Prior to the investment, the companies must submit an application to the State of Telangana.

(209)

If the application is approved, the State of Telangana sends to the applicant a letter called ‘approval or offer letter’ listing the eligible schemes and the amounts which the applicant can claim. For mega projects, the State of Telangana may offer subsidies tailor made to the applicant on the basis of the support schemes indicated in recital (207).

(210)

Once the State of Telangana has sent to the applicant the approval/offer letter, the applicant needs to submit individual payment claims for each of the subsidy schemes offered but not necessarily for all of them.

(211)

The schemes from the State of Telangana constitute subsidies within the meaning of Article 3(1)(a)(i) and Article 3(2) of the basic Regulation. The disbursements are financial contributions by the State of Telangana, since the State of Telangana makes a direct transfer to the beneficiary. In addition, these disbursements confer a benefit since the beneficiary gets part of the investment it has carried out covered by the State.

(212)

These schemes are deemed to be specific as its eligibility, as explained in recital (206), is limited to companies investing in the State of Telangana, and therefore countervailable under Article 4(3) of the basic Regulation. Furthermore, the eligibility of the scheme is also limited, as explained in recital (206) to those manufacturers operating in the electronics industry. In addition, very large projects such as those qualifying as ‘mega-projects’, are subject to benefit from tailor-made incentives by the State of Telangana. The Commission therefore found the scheme countervailable under Article 4(2), point (a) of the basic Regulation.

(213)

The investigation revealed that the HFCL group benefited from investment subsidies, interest subsidies, stamp duty reimbursement and power subsidies.

(214)

The amount of countervailable subsidies was calculated, in accordance with Article 7(3) of the basic Regulation, on the basis of the amount granted by the State of Telangana to the beneficiaries. The Commission established that the benefit is conferred to the recipient at the time when the beneficiaries accrued the amounts resulting from the letter received from the State of Telangana.

(215)

For those subsidies consisting in investment subsidies, the total amount was spread across a period which reflects the normal depreciation period of such capital goods in the industry concerned. The amount calculated, which is attributable to the IP, has been adjusted by adding interest during this period in order to reflect the full-time value of the money. The commercial interest rate (43) during the investigation period in India was considered appropriate for this purpose.

(216)

Following definitive disclosure, the Commission, as a result of the claim from the MP Birla Group indicated in recital (55) changed the benchmark of the commercial interest rate as indicated in recital (56) above.

(217)

Furthermore, the Commission identified and corrected a clerical error in the calculation.

(218)

The HFCL group also used this scheme to support the manufacturing of input materials. Therefore, the Commission apportioned the appropriate amount of benefit to the OFC manufacturers which was then used in the calculation of the countervailable subsidy amount on the basis of the method described in recital (214).

(219)

The subsidy rate established with regard to the scheme described above during the investigation period for the sampled groups of companies amounted to:

Schemes from the State of Telangana

(220)

The Commission established that the MP Birla Group used support schemes granted by the State of Madhya Pradesh during the investigation period.

(221)

The legal basis applicable during the investigation period was the 2014 Industrial Promotion Policy, as amended in October 2019 (44). The purpose of this policy was to encourage industrial investments and employment creation in Madhya Pradesh by way of tax refund, while at the same time levying a share of the additional tax revenues created by the investment.

(222)

The eligible companies are those operating in sectors other than the sectors indicated in Section 5.2.1 of the 2014 Industrial Promotion Policy, and which will invest in Madhya Pradesh to establish new production units, to increase capacity, to diversify its production or to upgrade technical equipment, are eligible.

(223)

The companies must submit an application to the State of Madhya Pradesh. If the application is approved, the State of Madhya Pradesh sends to the applicant a letter called ‘sanction letter’ listing the eligible schemes and the amounts which the applicant can obtain.

(224)

The 2014 Industrial Promotion Policy include several support schemes depending on the value of the investments and of the sector of activity, companies could benefit from different support measures.

(225)

The capacity increase projects pursued by the MP Birla Group were classified as large-scale industrial units which benefitted from payments from the State of Madhya Pradesh through the refund of various taxes.

(226)

The schemes from the State of Madhya Pradesh constitute subsidies within the meaning of Article 3(1)(a)(i) and Article 3(2) of the basic Regulation. The disbursements are financial contributions by the State of Madhya Pradesh, since the State of Madhya Pradesh makes a direct transfer to the beneficiary. In addition, these disbursements confer a benefit since the beneficiary gets part of the investment it has carried out covered by the State.

(227)

The scheme are deemed to be specific because the State chooses investment projects from all industries but some are excluded, as indicated in recital (222), so the scheme is not generally available. Therefore, the scheme is also countervailable under Article 4(2), point (a) of the basic Regulation. In addition, its eligibility is limited to companies investing in the State of Madhya Pradesh, as indicated in recital (222), and are therefore countervailable under Article 4(3) of the basic Regulation.

(228)

Following definitive disclosure, the MP Birla Group claimed that the eligibility criteria of this scheme were general and applied to all investors meeting the criteria, whereas the industries ineligible for the incentives under this scheme were excluded for public order considerations, such as environmental protection, public health, and public morals. According to MP Birla Group, these exclusions were not arbitrary but were grounded in legitimate public policy objectives warranted by Article XX of the General Agreement on Tariffs and Trade.

(229)

The Commission firstly noted that the industries excluded from the scheme listed also ‘Activities pertaining to trading and services’. This showed that the rationale for excluding certain industries was not only public order considerations, such as environmental protection, public health and public morals. Secondly, the Commission noted that the industries not eligible for the scheme listed, at point 19 of Annexure B of the 2014 Industrial Promotion Policy, ‘Any industry declared by state government from time to time’. This showed that the industries excluded from the scheme – and, consequently, those eligible under the scheme – depended on a discretionary decision of the State of Madhya Pradesh. Therefore, this claim was rejected.

(230)

The investigation revealed that the BCL and VTL benefited from the tax refund described in recital (225).

(231)

The amount of countervailable subsidies was calculated, in accordance with Article 7(3) of the basic Regulation, on the basis of the amount granted by the State of Madhya Pradesh to the beneficiaries. For those subsidies consisting in investment subsidies, the total amount was spread across a period which reflects the normal depreciation period of such capital goods in the industry concerned. The MP Birla Group accrued the amount only when each annual instalment was received, insofar the MP Birla Group did not have prior notice of the amount of the annual instalments besides the total amount approved by the State of Madhya Pradesh. Therefore, the Commission established that the benefit is conferred to the MP Birla Group at the time when the beneficiaries receive the amounts resulting from the approval letter received from the State of Madhya Pradesh. For investment subsidies, the amount calculated, which is attributable to the IP, has been adjusted by adding interest during this period in order to reflect the full-time value of the money. The commercial interest rate (45) during the investigation period in India was considered appropriate for this purpose.

(232)

Following definitive disclosure, the Commission, as a result of the claim from the MP Birla Group indicated in recital (55) changed the benchmark of the commercial interest rate as indicated in recital (56) above.

(233)

Following definitive disclosure, MP Birla Group claimed that the benefit calculated for VTL under this scheme included subsidies related to the company’s first expansion, which had been fully depreciated by the time of the investigation period. Moreover, MP Birla Group claimed that an incorrect depreciation period had been applied to subsidies received in relation to buildings. Finally, MP Birla Group claimed that the Commission took into account certain amounts that should have not formed part of the calculation.

(234)

The Commission considered all three claims to be justified and adjusted the calculations accordingly. After accepting the first two claims by taking out the amounts related to the first expansion and by applying the correct depreciation period for buildings, the last claim did not require any further adjustment to the calculation of the benefit.

(235)

Furthermore, the Commission identified and corrected a clerical error in the calculation of the subsidy rate of BCL under this scheme.

(236)

In accordance with Article 7(2) and 7(3) of the basic Regulation, this subsidy amount has been allocated over the turnover of the product under investigation during the IP because the companies obtained the subsidies as regards the assets only for producing the product under investigation, and because the subsidy was not granted by reference to the quantities manufactured, produced, exported or transported.

(237)

The subsidy rate established with regard to the scheme described above during the investigation period for the sampled groups of companies amounted to:

Schemes from the State of Madhya Pradesh

(238)

Although the official import statistics are reported in kilograms, the Commission considered that this unit was not suitable for a proper measurement of the volumes concerned. The investigation showed that the industry commonly does not use weight but length as a main volume indicator. This could measure either the length of the cable (cable-km), or the total length of the fibres contained therein (fibre-km). During the anti-dumping investigation on imports of OFC originating in China (46) as well as in the separate anti-dumping investigation on imports of OFC originating in India, the Commission considered that cable-km was the most appropriate unit of measurement. The same approach was used in this investigation.

(239)

The like product was manufactured by 14 producers or groups of producers in the Union during the investigation period. They constitute the ‘Union industry’ within the meaning of Article 9(1) of the basic Regulation.

(240)

The total Union production during the investigation period was established at around 1,7 million cable-km. The Commission established this figure on the basis of all the available information concerning the Union industry, such as direct information from the three sampled Union producers, five other Union producers supporting the complaint and market intelligence for the remaining producers. As indicated in recital (12) the three sampled Union producers represented more than 50 % of the estimated total volume of production of the like product.

(241)

To establish whether the Union industry suffered injury and to determine consumption and the various economic indicators related to the situation of the Union industry, the Commission examined whether and to what extent the subsequent use of the Union industry’s production of the like product (captive use) had to be taken into account in the analysis.

(242)

The Commission found that between 9 % and 13 % of the sampled Union producers’ production was destined for captive use during the period considered. The cables were in that case delivered within the same company or groups of companies for further downstream processing, in particular for the production of cables fitted with connectors.

(243)

The distinction between captive and free market is relevant for the injury analysis because products destined for captive use are not exposed to direct competition from imports. By contrast, production destined for free market sale is in direct competition with imports of the product concerned.

(244)

To provide a picture of the Union industry that is as complete as possible, the Commission obtained data for the entire optical fibre activity and determined whether the production was destined for captive use or for the free market.

(245)

The Commission examined certain economic indicators relating to the Union industry on the basis of data for the free market. These indicators are: sales volume and sales prices on the Union market; market share; growth; export volume and prices; profitability; return on investment; and cash flow. Where possible and justified, the findings of the examination were compared with the data for the captive market in order to provide a complete picture of the situation of the Union industry.

(246)

However, other economic indicators could meaningfully be examined only by referring to the whole activity, including the captive use of the Union industry (47). These are: production; capacity, capacity utilisation; investments; stocks; employment; productivity; wages; and ability to raise capital. They depend on the whole activity, whether the production is captive or sold on the free market.

(247)

The Commission established the Union consumption based on the sales made by the Union industry on the Union market as determined by the complainant plus import data from India established in line with the methodology described in Section 4.5.1.

(248)

Imports from other third countries were established on the basis of Eurostat data. Since Eurostat identifies imports of the product concerned in kg, imports were converted into cable-km in line with recital (238) using the same conversion factor that was applied for Indian exporting producers.

(249)

Union consumption developed as follows:

Table 1

Union consumption (cable-km)

(250)

The total Union consumption, including free and captive, increased by 16 % between 2020 and 2021 from about 2,4 million cable-km in 2020 to about 2,7 million cable-km in 2021. Between 2022 and the investigation period, it decreased by about 4 % to about 2,5 million cable-km. The increase in consumption in 2021 can be explained by a catch-up effect following the disruptions linked to the COVID-19 pandemic.

(251)

The captive market is constituted by the use of OFC in connectivity solutions offered by the companies, including cables fitted with connectors. The volumes were 9 % of the total Union consumption during the investigation period. Captive sales showed an increase of 45 % throughout the period considered.

(252)

The free-market consumption developed in line with the total Union consumption. It increased in 2021 by 15 %, followed by a decrease of 9,5 % in 2022 and an increase in the investigation period by 5,7 %. There was an increase of 1 % from 2020 to the investigation period.

(253)

The Commission established the volume of imports from India on the basis of the verified questionnaire replies of the sampled exporting producers and the information provided by the cooperating non-sampled exporting producers. As mentioned in recital (238), the unit of measurement used was cable-km. On this basis, the volume of imports from India in the investigation period constituted 113 % of the total imports reported by Eurostat for the same period.

(254)

The market share of the total imports from India was established on the basis of the import volume as compared to the volume of total free market consumption shown in Table 1.

(255)

Subsidised imports into the Union from the country concerned developed as follows:

Table 2

Import volume (cable-km) and market share

(256)

Subsidised imports from India showed a strong increase over the period considered from 64 155 cable-km in 2020 to 222 575 cable-km in the investigation period. This increase of 247 % exceeds by far the development on consumption and shows the magnitude of the market penetration by Indian imports.

(257)

As a result, the market share of the subsidised imports increased from 2,9 % to 9,8 % over the period considered, a sharp increase of 243 %. It should be noted that the volumes of Indian subsidised imports increased in particular in the period of 2020-2022.

(258)

The Commission established the prices of subsidised imports on the basis of the verified questionnaire replies of the sampled exporting producers and the information provided by the cooperating non-sampled exporting producers. Price undercutting of the imports was established on the basis of CIF prices for the sampled exporting producers and the verified questionnaire replies of the sampled Union producers.

(259)

The weighted average price of subsidised imports into the Union from the country concerned developed as follows:

Table 3

Import prices (EUR/cable-km)

(260)

Prices of subsidised imports from India decreased from 857 to 447 EUR/cable-km over the period considered, a fall of 48 %. Except for 2020, the subsidised import prices were consistently below the price of the Union industry charged to unrelated customers on the Union market during the period considered (see table 8).

(261)

Against this backdrop, the Commission determined the price undercutting during the investigation period by comparing:

(262)

Where sales were made to related importers in the Union, for the calculation of undercutting margin an export price (‘constructed CIF’) was calculated on the basis of the invoice value to the first independent customer, from which importation related allowances to the CIF point, as well as the SG&A and profit of the related importer were deducted, applying Article 2(9) of Regulation (EU) 2016/1036 of the European Parliament and of the Council (48) by analogy.

(263)

The price comparison was made on a type-by-type basis for transactions at the same level of trade, duly adjusted where necessary, and after deduction of rebates and discounts. The result of the comparison was expressed as a percentage of the sampled Union producers’ theoretical turnover during the investigation period, and as an overall weighted average amounted to 38,2 %.

(264)

In any event, regardless of the level of undercutting, the Commission found that the subsidised imports significantly depressed and suppressed the prices of the Union, which decreased during the period considered whilst cost of production constantly increased. Therefore, the Union industry could not increase their prices to the necessary levels to make reasonable profits.

(265)

In accordance with Article 8(4) of the basic Regulation, the examination of the impact of the subsidised imports on the Union industry included an evaluation of all economic indicators having a bearing on the state of the Union industry during the period considered.

(266)

For the injury determination, the Commission distinguished between macroeconomic and microeconomic injury indicators. The Commission evaluated the macroeconomic indicators on the basis of data contained in the questionnaire reply submitted by the complainant covering data related to all Union producers. The Commission evaluated the microeconomic indicators on the basis of data contained in the questionnaire replies from the sampled Union producers. The data related to the sampled Union producers. Both sets of data were found to be representative of the economic situation of the Union industry.

(267)

The macroeconomic indicators are: production, production capacity, capacity utilisation, sales volume, market share, growth, employment, productivity, magnitude of the dumping margin, and recovery from past dumping.

(268)

The microeconomic indicators are: average unit prices, unit cost, labour costs, inventories, profitability, cash flow, investments, return on investments, and ability to raise capital.

(269)

The total Union production, production capacity and capacity utilisation developed over the period considered as follows:

Table 4

Production, production capacity and capacity utilisation

(270)

Throughout the period considered, the production volume of the Union industry increased from roughly 1,4 million cable-km to approximately 1,7 million cable-km, i.e. overall by 20 %. A more detailed analysis showed that the increase in production volume occurred mainly from 2020 to 2021 where it grew by 18 %, it further increased slightly by 4 % in 2022, while it fell again by 2 % in the investigation period.

(271)

During the period considered, production capacity increased by 13 % which reflects the investments made by some of the Union producers. Despite the increase, investment levels remained overall at very low levels and were the minimum necessary to maintain market presence of the Union industry.

(272)

Capacity utilisation increased by 13 % over the period of 2020 to 2022, followed by a decrease of 4 percentage points in the investigation period, which is due to the decrease in production during the same period.

(273)

The Union industry’s sales volume and market share developed over the period considered as follows:

Table 5

Sales volume and market share

(274)

Throughout the period considered, the total Union sales volume of the Union industry on the free and captive market increased from roughly 1 million cable-km in 2020 to over 1,2 million cable-km in the investigation period, i.e. by 22 %.

(275)

Union sales volume on the free market increased from around 880 000 cable-km in 2020 to around 1 040 000 cable-km in the investigation period, i.e. by 17 % over the period considered. This translated in an increase of market share from 39,3 % in 2020 to 45,6 % in the investigation period.

(276)

The increase in market share of the Union industry over the period considered must be accounted to two main factors: (i) price suppression suffered by Union producers (see Section 4.5.2); and (ii) the imposition of anti-dumping measures on Chinese OFC imports in November 2021. In a period of almost stable consumption, the market share of the Union producers was regained almost exclusively against the Chinese dumped imports. As explained below in Section 4.6.2.3, the Union industry could not fully benefit from the remedial effect of the anti-dumping duties against China as significant part of Chinese sales were taken over by the subsidised Indian imports.

(277)

The Union’s industry captive market (expressed as a percentage of the free market consumption) showed an increasing trend over the period considered from 6,2 % in 2020 to 9,0 % in the investigation period. Captive market is OFC that have been used for connectivity purpose (drop cables, in-building cables and datacentres cables). There is an increased demand in the connectorised market, hence the increase of captive use of OFC. Given the higher prices of these products and the available spare capacity, Union industry choose to maintain the captive use business since is allows to differentiate products, to increase capacity utilisation and lower the unit cost and had a positive impact on the overall profitability of the Union industry. Therefore, it did not have any negative impact on the overall economic situation of the Union Industry.

(278)

Despite the anti-dumping measures in force on imports of OFC originating in China, the Union industry was not able to regain significant market share as a considerable part of the market share previously held by the Chinese exporting producers was taken over by the Indian subsidised imports. Therefore, the Union industry was prevented from fully benefitting of the establishment of a level playing field with the Chinese imports and was prevented from increasing its production and sales volumes accordingly.

(279)

Employment and productivity developed over the period considered as follows:

Table 6

Employment and productivity

(280)

The Union industry employment rose by 13 % from 2020 to the investigation period on an FTE basis. This development largely follows the trend in production volume shown in Table 4.

(281)

As the figures for production and employment mirrored each other closely, productivity in terms of cable-km per employee remained largely stable.

(282)

All subsidy margins were significantly above de minimis level. The impact of the magnitude of the actual margins of subsidy on the Union industry were substantial, given the volume and prices of imports from the country concerned.

(283)

During the first half of the period considered, the situation of the Union industry, including its profitability level, was still affected by dumped and subsidised imports from China, as also discussed in Section 5 below. The Union industry could not fully benefit from the remedial effect of the duties on Chinese imports due to the significant increase of the Indian subsidised imports, as explained below in recital (278).

(284)

The weighted average unit sales prices of the sampled Union producers to unrelated customers in the Union developed over the period considered as follows:

Table 7

Sales prices in the Union

(285)

Sales prices on the Union market to unrelated parties (the free market) decreased between 2020 and 2021 by 5 % and increased slightly in the following years, without however reaching the levels of 2020.

(286)

Although unit cost of production decreased in the period 2020-2021 by 5 %, in line with average prices in the free Union market, it showed an increase in the period 2021-IP (i.e. by 14,5 %), while sales prices increased only by 2 %. The cost increase between 2021 and the IP was mainly due to increases in raw material prices and employment costs in line with inflationary developments.

(287)

The average labour costs of the sampled Union producers developed over the period considered as follows:

Table 8

Average labour costs per employee

(288)

The average labour costs per employee showed a steady increase over the period considered. This reflects the additional costs of workforce, including adjustments to inflation.

(289)

Stock levels of the sampled Union producers developed over the period considered as follows:

Table 9

Inventories

(290)

The stocks of the sampled Union producers fluctuated but overall increased by 21 % in the period considered. Given that the majority of the production takes place based on orders and customers specifications, inventories do not constitute a meaningful indicator of injury.

(291)

Profitability, cash flow, investments and return on investments of the sampled Union producers developed over the period considered as follows:

Table 10

Profitability, cash flow, investments and return on investments

(292)

The Commission established the profitability of the sampled Union producers by expressing the pre-tax net profit of the sales of the like product to unrelated customers in the Union as a percentage of the turnover of those sales.

(293)

The profitability decreased continuously throughout the period considered and dropped from 12,7 % in 2020 to 3,4 % in the investigation period. The most significant drop in profitability occurred in 2022 in parallel to a significant increase of the market share of the Indian subsidised imports from [2–4] % to [8–12] %. During the period considered, the cost of the Union industry increased by 9 % while sales prices decreased by 2 %, which is due to the price pressure of the Indian subsidised imports.

(294)

The net cash flow is the ability of the Union producers to self-finance their activities. The trend in net cash flow developed in line with the trend in profitability and showed a strong decrease over the period considered of about 50 %.

(295)

Investments dropped between 2020-2021 substantially by about 50 %. Over the period considered, the level of investments could be recovered and even increased by 44 % compared to 2020. However, investments remained overall at low levels since the beginning of the period considered and were mainly made to make efficiency gains, to maintain existing facilities and to perform research and development activities. As a direct result of the pressure from subsidised imports, the Union industry had to postpone investments.

(296)

The return on investments is the profit in percentage of the net book value of investments. The return on investments developed negatively over the period considered and fell by 43 %. This negative development shows that, although investments continued to be made, in order to maintain and improve efficiency and competitiveness, the returns on those investments fell substantially over the period considered due to the impossibility for the Union industry to improve the profitability rate.

(297)

With returns on investments falling so quickly, the ability to raise capital in the future is clearly in jeopardy should the situation continually fail to improve.

(298)

A vast majority of OFC is sold through tender procedures. In order to obtain the necessary insights into this market aspect, the Commission requested detailed information on tenders from the sampled Indian exporting producers, the sampled Union producers, importers and users. Information was requested on the characteristics of the tenders, such as process, timing and other relevant characteristics. No public tendering entity or telecom operator participated in the investigation and provided information.

(299)

The investigation showed a fragmented picture of tenders, including in terms of process, scope and outcomes. They can be organised by public or private entities such as large telecom operators. Tenders can take place in different forms, such as e-auctions or direct bidding. The tender process will typically last 3-6 months from the announcement of the tender to the conclusion. Within one to two months after conclusion of the tender, purchase orders will be issued by the customer and deliveries will be made according to the terms and conditions defined in the contract. The investigation confirmed that the price represents the most important decision criterion, considering that tenders are issued for products whose technical characteristics have been specified in detail (49).

(300)

The tendering process intensified competition, since the presence of the Indian exporting producers bidding at very low prices pushed the Union industry to reduce their prices to unsustainable levels in an effort to match the Indian bids and prevented them from passing on their cost increases to their customers. The tender conditions typically do not include a contractual obligation for the buyer to purchase the quantity tendered, whereas they include a contractual obligation for the supplier to supply the tendered quantity at the offered price.

(301)

Given that most of the market is supplied via tenders, the tender mechanism is the price setter in the market. Hence, the Indian exporter bidding at much lower prices than the Union industry, are, despite the still relatively low quantities sold, the ones setting the reference price that the Union industry is expected to match. This is confirmed also by the significant undercutting levels established in the investigation.

(302)

Given the nature of tenders, a delayed effect needs to be taken into consideration. The subsequent delivery (and invoicing) of OFC following a won tender would take place in the months or years after the conclusion of the tender. Over the period considered the Union industry was suffering from the sales volume lost to the Chinese exporters before the imposition of the measures while, at the same time, facing competition from the subsidised Indian exports whose effects, on sales volume, will persist also after the investigation period. Therefore, overall, the development on tenders confirmed the continued effect of price suppression. The increased presence of Indian exporting producers prevented the recovery of the Union industry from Chinese imports and is set to continue having a negative effect, in the absence of measures.

(303)

Several indicators showed a positive trend such as production, capacity, sales volume and market share as well as employment. However, the increase in the Union industry’s market share can be linked to the decrease of market share for imports from China, following the imposition of measures in November 2021 and January 2022, where the Union industry managed to recuperate some of the market share previously lost to the Chinese imports. Nevertheless, at the same time, the Union industry faced increased cost of production while the average Union sales prices showed a decreasing trend. Although it was expected that the measures against imports from China would lead to a relief for the Union producers, the strong increase in the market share of Indian subsidised imports showed that there was continued price pressure generated by Indian exports, with significant undercutting, and, in any event, price suppression throughout the period considered. This became clear in the significant drop in profitability and cash flow and the very low levels of investment.

(304)

On the basis of the above, the Commission concluded that the Union industry suffered material injury within the meaning of Article 8(4) of the basic Regulation.

(305)

In accordance with Article 8(5)of the basic Regulation, the Commission examined whether the subsidised imports from the country concerned caused material injury to the Union industry. In accordance with Article 8(6) of the basic Regulation, the Commission also examined whether other known factors could at the same time have injured the Union industry. The Commission ensured that any possible injury caused by factors other than the subsidised imports from the country concerned was not attributed to the subsidised imports. These factors were: imports from China, imports from other third countries, and captive sales.

(306)

The deterioration of the Union industry’s situation coincided with the rapid increase of subsidised imports from India which penetrated the Union market in substantial volumes, significantly undercutting the Union industry’s prices and, in any event, exercising significant price suppression on Union sales.

(307)

The volume of subsidised imports from India increased (as shown in Table 2) from [59 300–72 500] cable-km in 2020 to [203 700–248 400] cable-km in the investigation period, representing an increase of 247 %. In terms of market share, the increase over the same period was from [2–4] % to [8–12] %, an almost three-fold increase (243 %). Over the same period (as shown in Table 5), the Union industry’s market share in the free market was less pronounced, from 40,4 % to 47,2 %, an increase of 17 % (6,8 percentage points) Therefore it can be concluded that it has been subsidised imports from India that took advantage of the decrease of the imports from China.

(308)

The average price of the subsidised imports decreased significantly over the period considered by 48 % as described in Table 3 and were undercutting the Union industry’s sales prices on average by 38,2 %. Sales prices of the Union industry on the Union free market to unrelated parties dropped overall by 3 % over the period on the basis of the analysis in Table 7.

(309)

The level of undercutting, in combination with the low profitability of the Union industry, shows that the subsidised imports were at prices well below the Union industry’s cost of production, both via the mechanisms of tenders and via spot sales. This price behaviour prevented the Union industry from fully recovering the market share previously lost to the dumped Chinese import and eroded its profit levels since the beginning of the period considered. It has generated price suppression, and financial injury in terms of both depressed profitability and waning investments, jeopardising the existence of Union industry.

(310)

The Union industry, in an attempt to match the low, subsidised prices set by the Indian producers and in order to defend its sales volume in a period of increasing costs, was not able to increase its prices at the pace of the increase of costs. This resulted in a profound profitability drop for all sampled Union producers.

(311)

Therefore, while the Union industry managed to increase their market share during the period considered, this was done at the expense of prices and resulting in significant decrease in profits (price suppression).

(312)

As described in recital (295) above, there was also evidence that certain planned investments and expansion projects of the Union industry had been cancelled or suspended due to the increase in Indian subsidised imports.

(313)

It follows from the above that the increase of subsidised imports from India prevented the Union industry from recovering market shares and from reaching sustainable levels of profit.

(314)

The Commission therefore concluded that there was a causal link between the subsidised imports from India and the material injury suffered from the Union industry.

(315)

The volume of imports from China developed over the period considered as follows:

Table 11

Imports from China

(316)

Imports from China decreased over the period considered from 843 000 cable-km in 2020 to around 514 000 cable-km in the investigation period. The market share decreased accordingly from 37,5 % to 22,6 %. This development can be linked to the anti-dumping and countervailing measures on OFC from China that were introduced in November 2021 and January 2022 respectively following the China investigations mentioned in recital (6) and the increase of anti-dumping duties in August 2023 following the anti-absorption investigation. As mentioned in recital (278), due to the still strong presence of the Chinese imports at prices absorbing the anti-dumping duties, the Union industry was not fully shielded from the dumping practice of the Chinese exporting producers during the period considered. Therefore, the Commission concluded that the Chinese imports may have negatively affected the Union industry’s situation and contributed to the injury suffered. However, the Chinese imports showed also a significant downward trend during the period considered, both in absolute and in relative terms. In addition, they showed an increasing price trend, with average prices above the average prices of the subsidised imports from India.

(317)

Based on the above, the Commission concluded, that even if Chinese imports may have had a negative impact on the situation of the Union industry during the period considered, they did not attenuate the causal link between subsidised Indian imports and the material injury suffered by the Union industry.

(318)

The volume of imports from third countries other than China developed over the period considered as follows:

Table 12

Imports from other third countries

(319)

Imports from other third countries were from various sources. The countries with the highest imports volume and market share were from Morocco and the UK.

(320)

Imports from Morocco increased from around 26 000 cable-km in 2020 to around 103 000 cable-km during the investigation period. Their market share increased from 1,2 % in 2020 to 4,6 % in the investigation period. However, as shown above, average price trends increased by about 20 % during the same period and were at significantly higher levels than those from the subsidised imports from India and above the Union industry’s prices in the IP. Therefore, the Commission concluded that Moroccan imports did not cause any material injury to the Union industry.

(321)

Import statistics related to the UK for the year 2020 were tainted by Brexit and not considered a reliable basis to establish import volumes and values for the UK for that year. Therefore, the Commission estimated the level of imports for 2020 at a similar level as the imports in 2021. On this basis, the UK imports had a rather stable trend, overall showing a slight decrease of 3 %, from about 80 000 cable-km in 2020 to about 78 000 cable-km during the investigation period. Their market share decreased accordingly from 3,6 % to 3,4 % in the same period. Considering that the average price for UK imports were significantly above the average price of Union, the Commission considered that they did not cause any material injury to the Union industry.

(322)

Imports from Türkiye were stable in 2020 and 2021, increased by 5 % in 2022 before dropping by 16 % in the investigation period. Overall, the imports had thus a decreasing trend of 11 % between 2020 and the investigation period. In absolute terms, imports decreased from about 56 800 cable-km in 2020 to about 50 000 cable-km in the investigation period. The market share remained relatively stable and decreased slightly from 2,5 % to 2,2 % in the period considered. Although the price level was below the one of the Union producers, no additional market share could be obtained. While the Commission could not exclude that those imports contributed to the injury of the Union industry, the impact was considered to be limited, and the Commission therefore concluded that they did not attenuate the causal link between the subsidised imports and the material injury suffered by the Union industry.

(323)

The Commission considered that imports from South Korea, Indonesia, Tunisia, Mexico and Switzerland were at very low levels throughout the period considered. With exception of Tunisia and Mexico they showed significant downward trends. Imports from Tunisia and Mexico had decreasing import volumes from 2022 to the investigation period. Average import prices from these countries were high and above the Union industry’s average sales prices. On this basis, the Commission concluded that these imports did not cause any material injury to the Union industry.

(324)

Imports from other third countries decreased moderately in the period considered in absolute terms from about 110 000 cable-km in 2020 to about 100 000 cable-km in the investigation period. The market share decreased from 4,9 % to 4,4 %. They showed high and increasing price levels and therefore, there are no indications that they caused material injury to the Union industry.

(325)

As shown at Table 5, during the period considered the Union industry’s captive sales increased by 47 %.

(326)

However, as explained above in recital (277) the Commission found no evidence that captive sales had any significant impact on the evolution of the injury indicators. Therefore, the Commission concluded that the captive use did not cause material injury to the Union industry.

(327)

The Commission established a causal link between the material injury suffered by the Union industry and the subsidised imports from India. The increase of subsidised Indian imports coincided with the deterioration of the Union industry’s situation. The sharp increase of subsidised imports from the country concerned was made at prices significantly undercutting the Union industry’s sales prices at levels even below the cost of production of the Union industry. They thus prevented the Union industry from setting prices at sustainable levels necessary to achieve reasonable profit margins. To the contrary, price levels could not match the increase in costs with significant negative effects on the profitability and investment levels of the Union industry.

(328)

The Commission distinguished and separated the effects of all known factors on the situation of the Union industry from the injurious effects of the subsidised imports. The Commission concluded that other factors such as the imports from China, and imports from Turkey may have contributed to the material injury suffered by the Union industry but given the developments of their import volumes and/or price developments did not attenuate the casual link between the subsidised imports from India and the material injury suffered by the Union industry. None of the other known factors explained the Union industry’s negative developments in terms of price suppression and profitability, its low investments levels and the negative development on the return on investments.

(329)

On the basis of the above, the Commission concluded that the subsidised imports from the country concerned caused material injury to the Union industry and that the other factors, considered individually or collectively, did not attenuate the causal link between the subsidised imports and the material injury.

(330)

In accordance with Article 31 of the basic Regulation, the Commission examined whether it could clearly conclude that was not in the Union interest to adopt measures in this case, despite the determination of injurious subsidisation. The determination of the Union interest was based on an appreciation of all the various interests involved, including those of the Union industry, importers, and users.

(331)

The Union industry is composed of 14 producers or groups or producers, employing about 5 140 staff (FTE). The producers are widely spread throughout the Union.

(332)

The imposition of countervailing measures would increase the price levels in the Union and thus allow the Union industry to increase its prices in line with the increase in its cost of production. This will result in more sustainable profit levels allowing the Union industry to increase its investment levels and resume its investments in innovations that are necessary for the Union industry to maintain a competitive position in the market and to maintain its market presence, as well as recover the market share lost to the Chinese dumped and subsidised imports in the past.

(333)

The non-imposition of measures is likely to have a significant negative effect on the Union industry in terms of further price suppression and possible depression. A further price decline would mean that the Union industry will be lossmaking in the short term. To avoid a deterioration of its profitability, the Union industry may decide to maintain its current price levels, which are, however, already unsustainable; or to increase its prices at the expense of sales. This will lead to an immediate reduction of production volume. Furthermore, this situation will prevent the Union industry to increase its investment levels, necessary to defend its presence in the market by offering innovative solutions and product developments. Consequently, the Union industry will be subject to a further financial deterioration in terms of profitability and investments, jeopardising its future. Should measures not be imposed, it can be expected that the increase of subsidised imports from India would continue and even increase significantly, given the substantial undercutting margins, and the nature of the market, which is driven by tenders having long-term effects. In that situation, the Union industry would be unable to recover from the injurious effects.

(334)

It is therefore concluded that countervailing measures are in the interest of the Union industry.

(335)

On the date of initiation, 51 importers and users were contacted and invited to cooperate in the investigation. No unrelated importer cooperated during the investigation.

(336)

In the absence of cooperation from unrelated importers, the Commission was not able to determine the precise impact of countervailing duties on their businesses. In the China investigation, the Commission established that importers enjoyed profit margins between [15 %–20 %] and duties could be either absorbed or at least partially be passed on to their customers (50). The current investigation has not brought into light any facts or evidence contradicting these findings.

(337)

While the countervailing measures are likely to have a certain negative impact on importers and may reduce their profitability, the Commission considered that importers will be able to absorb and/or pass on some of the cost increase caused by the duty to their customers. Therefore, the Commission concluded that unrelated importers will not be disproportionally affected by the imposition of the measures.

(338)

The product under investigation is sourced by several industries, mainly telecom operators, public sector bodies (such as municipalities) owning or controlling fibre networks, installers, and distributors. None of these parties cooperated.

(339)

Only one user active in the telecoms industry cooperated during the investigation. The user’s reply to the questionnaire did not contain any arguments or information on Union interest aspects. This user did not import OFC from India and did not express either support or opposition to the measures.

(340)

The Commission also considered that, OFC constitutes only a minor part of the users’ overall costs, as the main cost driver for the fibre deployment is related to civil works. The Commission recalls that OFC represents a very small portion of EU telecom operators’ capital expenses, which according to ETNO reached EUR 59,1 billion in 2022 (51). Considering a total Union consumption of around 2,5 million cable/km (52) and an average price of EUR 756 per cable/km (53), the expenses related to OFC would represent around 3 % of telecom operators’ investments.

(341)

Therefore, it was concluded that measures would not disproportionally affect users.

(342)

OFCs are needed to build fast broadband networks. They are therefore of high importance for citizens, businesses and public entities across the Union, who depend on these networks for home working, home learning, for running a business or providing services. The investment through the NextGenerationEU programme (54) is one of the main priorities of the European Union which also aims to deploy high technology broadband infrastructure reaching every corner of the EU. Optical fibre cables are thus key for the EU Digital Decade (55) and also for its digital sovereignty and maintaining a healthy OFC industry in the Union can contribute to these objectives.

(343)

The imposition of measures would relieve the Union industry from the price pressure in the Union market caused by the subsidised Indian imports and enable them to increase their prices in line with cost increases. This would have a positive impact on their profitability and investment levels and enable them to defend their market position and invest in new technologies. Finally, survival of the Union producers is key for the EU’s digital sovereignty.

(344)

At the same time, measures would not prevent imports from other third countries from competing fairly on the Union market. The investigation did not reveal that measures would have a disproportionate negative effect on importers and downstream industries.

(345)

Overall, therefore, the Commission concluded that there were no compelling reasons that it was not in the Union interest to impose measures on imports of OFC originating in India at this stage of the investigation.

(346)

In view of the conclusions reached with regard to subsidisation, injury, causation, and Union interest, and in accordance with Article 15 of the basic Regulation, a definitive countervailing duty should be imposed.

(347)

Article 15(1), third subparagraph of the basic Regulation provides that the amount of the definitive countervailing duty shall not exceed the amount of countervailable subsidies established.

(348)

Article 15(1), fourth subparagraph states that ‘where the Commission, on the basis of all the information submitted, can clearly conclude that it is not in the Union’s interest to determine the amount of measures in accordance with the third subparagraph, the amount of the countervailing duty shall be less if such lesser duty would be adequate to remove the injury to the Union industry’.

(349)

No such information has been submitted to the Commission, and therefore the level of the countervailing measures will be set with reference to Article 15(1), third subparagraph.

(350)

On the basis of the above, the definitive countervailing duty rates, expressed on the CIF Union border price, customs duty unpaid, should be as follows:

(351)

The anti-subsidy investigation was carried out in parallel with a separate anti-dumping investigation concerning the same product concerned originating from India, in which the Commission imposed anti-dumping measures at the level of the dumping margin. The Commission made sure that the imposition of a cumulated duty reflecting the level of subsidisation and the full level of dumping would not result in offsetting the effects of subsidisation twice (‘double-counting’) in accordance with Article 24(1) and Article 15(2) of the basic Regulation.

(352)

The Commission considered whether some of the subsidy schemes are export contingent subsidies, which have the effect of reducing export prices and thus increase accordingly the dumping margins, in order to decide whether it needs to reduce the dumping margin by the subsidy amounts found in relation to export contingent subsidies in accordance with Article 24(1) of the basic Regulation.

(353)

Since the Commission did countervail some export contingent subsidy schemes, in accordance with Article 24(1) of the basic Regulation and in order to avoid double counting, the Commission first imposed the definitive countervailing duty at the level of the established definitive amount of subsidisation. Then the Commission imposed the remaining definitive anti-dumping duty, which corresponds to the relevant dumping margin reduced by the amount of the export contingent subsidies and up to the relevant injury elimination level established in the separate anti-dumping investigation. Since the Commission reduced the dumping margin found with the entire amount of subsidisation related to export subsidies, there was no double counting issue within the meaning of Article 24(1) of the basic Regulation.

(354)

Where the amount resulting from deducting the amount of export subsidisation from the dumping margin is higher than the injury margin, the Commission capped the anti-dumping duty at the injury margin. Where the amount resulting from deducting the amount of export subsidisation from the dumping margin is lower that the injury margin, the Commission set the level of the anti-dumping duty on the basis of the lower amount.

(355)

Given the high rate of cooperation of exporting producers in the country concerned, the Commission found that the level of the highest duty imposed on the sampled companies would be representative as the ‘all other companies’ rate. The ‘all other companies’ duty will be applied to those companies, which did not cooperate in this investigation.

(356)

In accordance with Article 15(3) of the basic Regulation, the total subsidy amount for the cooperating exporting producers not included in the sample was calculated on the basis of the total weighted average amount of countervailing subsidies established for the cooperating exporting producers in the sample.

(357)

On the basis of the above, the rates at which such duties will be imposed are set as follows:

(358)

The individual company countervailing duty rates specified in this Regulation were established on the basis of the findings of this investigation. Therefore, they reflect the situation found during this investigation with respect to these companies. These duty rates are exclusively applicable to imports of the product concerned originating in the country concerned and produced by the named legal entities. Imports of the product concerned produced by any other company not specifically mentioned in the operative part of this Regulation, including entities related to those specifically mentioned, should be subject to the duty rate applicable to ‘all other imports originating in India’. They should not be subject to any of the individual countervailing duty rates.

(359)

To minimise the risks of circumvention due to the difference in duty rates, special measures are needed to ensure the application of the individual countervailing duties. The application of individual countervailing duties is only applicable upon presentation of a valid commercial invoice to the customs authorities of the Member States. The invoice must conform to the requirements set out in Article 1(3) of this regulation. Until such invoice is presented, imports should be subject to the countervailing duty applicable to ‘all other imports originating in India’.

(360)

While presentation of this invoice is necessary for the customs authorities of the Member States to apply the individual rates of anti-dumping duty to imports, it is not the only element to be taken into account by the customs authorities. Indeed, even if presented with an invoice meeting all the requirements set out in Article 1(3) of this regulation, the customs authorities of Member States must carry out their usual checks and may, like in all other cases, require additional documents (shipping documents, etc.) for the purpose of verifying the accuracy of the particulars contained in the declaration and ensure that the subsequent application of the lower rate of duty is justified, in compliance with customs law.

(361)

Should the exports by one of the companies benefiting from lower individual duty rates increase significantly in volume after the imposition of the measures concerned, such an increase in volume could be considered as constituting in itself a change in the pattern of trade due to the imposition of measures within the meaning of Article 13(1) of the basic Regulation. In such circumstances and provided the conditions are met an anti-circumvention investigation may be initiated. This investigation may, inter alia, examine the need for the removal of individual duty rate(s) and the consequent imposition of a country-wide duty.

(362)

Statistics of OFC are frequently expressed in cable-km. However, there is no such supplementary unit for OFC specified in the Combined Nomenclature laid down in Annex I to Council Regulation (EEC) No 2658/87 (56) on the tariff and statistical nomenclature and on the Common Customs Tariff. It is therefore necessary to provide that not only the weight in kg or tonnes but also the cable-km for the imports of the product concerned must be entered in the declaration for release for free circulation. Cable-km should be indicated for CN and TARIC codes.

(363)

In view of Article 109 of Regulation (EU, Euratom) 2024/2509 of the European Parliament and of the Council (57), when an amount is to be reimbursed following a judgment of the Court of Justice of the European Union, the interest to be paid should be the rate applied by the European Central Bank to its principal refinancing operations, as published in the C series of the Official Journal of the European Union on the first calendar day of each month.

(364)

The measures provided for in this regulation are in accordance with the opinion of the Committee established by Article 15(1) of Regulation (EU) 2016/1037,