The US Department of Commerce has issued a final affirmative determination that producers and exporters of hard empty capsules from India received countervailable subsidies, a finding that could result in the imposition of countervailing duties on Indian exports.
According to a notice published in the Federal Register, the investigation covered the period from April 1, 2023, through March 31, 2024. The Commerce Department concluded that subsidies provided to Indian manufacturers met the legal standards required for countervailing duties under US trade law.
The department determined a net countervailable subsidy rate of 7.06 per cent ad valorem for ACG Associated Capsules Private Limited and its affiliates, including ACG Pam Pharma Technologies Private Limited and ACG Universal Capsules Private Limited. The same subsidy rate was applied to all other Indian producers and exporters not individually examined in the investigation.
Commerce said the probe was conducted under Section 701 of the Tariff Act of 1930, examining whether the alleged subsidies involved a financial contribution by an authority, conferred a benefit, and were specific to certain enterprises or industries. The agency verified subsidy information provided by ACG and its affiliates through on-site reviews conducted in July and August 2025.
Following verification and review of comments from interested parties, Commerce made changes to the subsidy rate calculations from its preliminary determination. The details of these changes are outlined in a separate Issues and Decision Memorandum accompanying the final ruling.
The scope of the investigation covers hard empty capsules made of two prefabricated cylindrical sections, commonly used in pharmaceutical and nutraceutical products. The ruling applies regardless of polymer material, additives, size, color, or whether the capsule cap and body are imported together or separately.
As a result of a preliminary determination issued on March 31, 2025, US Customs and Border Protection had been instructed to suspend liquidation and collect cash deposits on certain imports from India. While the suspension was later discontinued for entries after July 29, 2025, it remains applicable for entries made on or before July 28, 2025, pending a final injury determination.
The Commerce Department will now notify the US International Trade Commission (ITC), which has 45 days to determine whether the US domestic industry has suffered material injury or faces a threat of injury due to imports of hard empty capsules from India.
If the ITC issues an affirmative injury determination, Commerce will issue a countervailing duty order and reinstate the suspension of liquidation, requiring cash deposits at the determined rates. If the ITC finds no material injury, the proceeding will be terminated and any cash deposits collected will be refunded or canceled.
Commerce also stated it will disclose its final calculations to interested parties within five days of the public announcement or publication of the determination.
