The U.S. Department of Commerce has determined that Indian manufacturers of hard empty capsules received government subsidies, potentially leading to new countervailing duties on imports from India.
WASHINGTON, DC — The U.S. Department of Commerce has announced that Indian manufacturers and exporters of hard empty capsules have benefited from government subsidies. This ruling could result in new countervailing duties on imports from India, pending a separate decision by the U.S. International Trade Commission (ITC).
In a notice published in the Federal Register, effective December 29, the department stated that its investigation covered the period from April 1, 2023, to March 31, 2024. The agency concluded that the subsidies provided to Indian capsule manufacturers met the legal criteria for countervailing duties under U.S. trade law.
The Commerce Department established a net countervailable subsidy rate of 7.06 percent for ACG Associated Capsules Private Limited and its affiliated companies, which include ACG Pam Pharma Technologies Private Limited and ACG Universal Capsules Private Limited. This same rate applies to all other Indian producers and exporters that were not individually examined during the investigation.
The investigation assessed whether the subsidies involved financial contributions from government authorities, whether they provided a benefit to the companies, and whether they were specific to certain firms or industries. The department verified the information submitted by ACG and its affiliates during on-site reviews conducted in July and August 2025.
The investigation pertains to hard empty capsules composed of two prefabricated cylindrical sections, which are commonly utilized in pharmaceutical and nutraceutical products. The ruling is applicable regardless of the materials used, additives, size, color, or whether the capsule cap and body are imported together or separately.
Following a preliminary ruling issued on March 31, 2025, the Commerce Department directed U.S. Customs and Border Protection to suspend liquidation and collect cash deposits on specific Indian imports. Although this suspension was lifted for entries made after July 29, 2025, it remains in effect for imports entered on or before July 28, 2025, pending the ITC’s determination regarding potential injury to the U.S. domestic industry.
The Commerce Department will formally notify the ITC of its final subsidy finding. The ITC has 45 days to decide whether imports of hard empty capsules from India have caused or threaten to cause material injury to the U.S. domestic industry.
If the ITC concludes that injury exists, the Commerce Department will issue a countervailing duty order, reinstate the suspension of liquidation, and require cash deposits at the specified rates. Conversely, if the ITC finds no injury or threat of injury, the case will be terminated, and any collected deposits will be refunded or canceled.
Additionally, the Commerce Department plans to disclose its detailed calculations to interested parties within five days of the public announcement or publication of the final determination, in accordance with U.S. regulations.
According to IANS, this ruling marks a significant development in the ongoing scrutiny of international trade practices and their impact on domestic industries.