Indian Capsule Makers May Face US Duties After Investigation Report

WASHINGTON, DC — The US Department of Commerce has ruled that Indian manufacturers and exporters of hard empty capsules benefited from government subsidies, a decision that could result in new countervailing duties on imports from India. Any duties will depend on a separate ruling by the US International Trade Commission.

In a notice published in the Federal Register, effective December 29, the department said its investigation covered the period from April 1, 2023, to March 31, 2024. The agency concluded that subsidies provided to Indian capsule makers met the legal requirements for countervailing duties under US trade law.

Commerce set a net countervailable subsidy rate of 7.06 percent for ACG Associated Capsules Private Limited and its affiliated companies, including ACG Pam Pharma Technologies Private Limited and ACG Universal Capsules Private Limited. The same 7.06 percent rate applies to all other Indian producers and exporters that were not individually examined.

The department said it examined whether the subsidies involved financial contributions by government authorities, provided a benefit to the companies, and were specific to certain firms or industries. It verified the information submitted by ACG and its affiliates during on site reviews carried out in July and August 2025.

The investigation covers hard empty capsules made of two prefabricated cylindrical sections, which are widely used in pharmaceutical and nutraceutical products. The ruling applies regardless of the material 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, Commerce had directed US Customs and Border Protection to suspend liquidation and collect cash deposits on certain Indian imports. That suspension was later lifted for entries made after July 29, 2025, but remains in effect for imports entered on or before July 28, 2025, pending the ITC’s injury determination.

Commerce said it 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 US domestic industry.

If the ITC rules that injury exists, Commerce will issue a countervailing duty order, reinstate the suspension of liquidation, and require cash deposits at the specified rates. If the ITC finds no injury or threat of injury, the case will be terminated and any collected deposits will be refunded or cancelled.

Commerce also said it plans to disclose its detailed calculations to interested parties within five days of the public announcement or publication of the final determination, in line with US regulations. (IANS)