China Telecom is the largest consumer of the product, constituting 25-30 per cent of global fibre consumption.
While the global capacity of fibre is 700-750 million km annually, about 500 million km is in China. Sources point out firms like Sterlite export to over 100 countries and 70 per cent of their fibre and cable is exported.
The move has to be seen in the context of growing tension between China and India. The government here has banned many leading Chinese apps, which include the popular TikTok. It has given hint that Chinese telecom gear makers like Huawei might not be allowed to participate in the 5G auction.
Yet Indian exports of optical fibre to China have been negligible because they have not been able to make a dent due to the high import duties.
Sterlite says it has not been able to export more than 100,000 km to China in the past five years. However, the move comes hard on the heels of firms like Sterlite and Birla Furukawa Fibre Optics complaining to the Directorate General of Trade Remedies last year in August, seeking anti-dumping duties on exports of optic fibre from China. A decision which could lead to imposing a provisional safeguard duty of 25 per cent on Chinese imports might be taken up in the next few weeks.
Indian players point out that Chinese imports, which were a reasonable 1 million km in 2017, went up to around 7 million km in 2018-19, raising alarm bells because they constituted one-third of the country’s demand, which is 20-22 million km.
They allege that Chinese companies
are selling it at rock bottom prices, currently $3 a km. “While the global market for optic fibre was stagnant, demand from the government and Jio made the Indian market look attractive for them,” said a senior executive of an optic fibre major. Not only that, Chinese companies
have set up units in Indonesia, with which India has a free-trade agreement, which is being used to export to India at zero duty.
Sterlite has a manufacturing plant in China, which will not be affected by the Chinese move. The plant has an installed capacity of 14 million km and is running at 50 per cent. It sells in China and other countries.