US : lays the scene for penalties after discovering that Indian capsule manufacturers got subsidies
US: In the absence of a separate injury ruling by the US International Trade Commission (ITC), the US Department of Commerce’s final affirmative determination that Indian manufacturers and exporters of hard empty capsules received countervailable subsidies could result in the imposition of countervailing duties on Indian exports.
The Department of Commerce stated that its investigation covered the period from April 1, 2023, to March 31, 2024, and found that subsidies given to Indian manufacturers satisfied the requirements for countervailing duties under US trade law in a notice published in the Federal Register and applicable as of December 29.
For ACG Associated Capsules Private Limited and its affiliates, such as ACG Pam Pharma Technologies Private Limited and ACG Universal Capsules Private Limited, Commerce calculated a net countervailable subsidy rate of 7.06 percent ad valorem. All other Indian manufacturers and exporters who were not specifically investigated were subject to the same 7.06% tariff.
According to the agency, it carried out the inquiry in compliance with Section 701 of the Tariff Act of 1930 and looked into whether the purported subsidies were exclusive to certain businesses or sectors, entailed a monetary commitment from an authority, and provided a benefit. Commerce said that after on-site examinations conducted in July and August of 20252025-23827, it confirmed the subsidy information provided by ACG and its affiliates.
The notification states that after a review of verification results and interested parties’ responses, Commerce modified some of the subsidy rate estimates from its preliminary conclusion. A separate Issues and Decision Memorandum that was approved with the final decision 2025-23827 outlines the specifics of those modifications.
The investigation’s scope was also described by Commerce, who said that it includes hard empty capsules with two constructed cylindrical parts that are often seen in pharmaceutical and nutraceutical items. According to the notification, the scope is applicable independently of the polymer material, additives, size, color, and whether the body and cap are imported together or separately (2025–23827).
Following the March 31, 2025, preliminary ruling, Commerce has directed US Customs and Border Protection to halt the liquidation of certain Indian shipments and collect cash payments. According to the legislation, the suspension was subsequently lifted for entries made after July 29, 2025, although it still applies to entries made on or before July 28, 2025, awaiting the ITC’s injury determination2025-23827.
Commerce said that it would communicate its final positive subsidy decision to the ITC. Within 45 days, the ITC must determine whether the import of hard empty capsules from India has caused substantial harm to the US domestic sector or poses a significant damage danger. Commerce will issue a countervailing duty order and restore the suspension of liquidation, requiring cash deposits at the rates established in 2025-23827, if the ITC finds affirmative harm.
According to the notice 2025-23827, the action will end and any financial deposits received will be reimbursed or canceled if the ITC finds no significant harm or fear of injury.
In accordance with US laws, Commerce also said that it plans to provide interested parties with access to its calculations within five days of the finding being made public or, in the absence of an announcement, within five days of the determination being published in the Federal Register.