WORLD TRADE
ORGANIZATIONG/SG/N/6/IND/12
26 March 2002
(02-1536)
Committee on Safeguards Original:  English
NOTIFICATION UNDER ARTICLE 12.1(A) OF THE
AGREEMENT ON SAFEGUARDS ON INITIATION OF
AN INVESTIGATION AND THE REASONS FOR IT
INDIA
The following communication, dated 22 March 2002, has been received from the Permanent
Mission of India.
_______________
Attached herewith is a copy of Noti ce (Notification No. SG/INV/1/2002 dated
14 March 2002) of initiation of a safeguard investigation by the Director General (Safeguards) on
imports of Epichlorohydrin (ECH) into India.G/SG/N/6/IND/12
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OFFICE OF THE DIRECTOR GENERAL (SAFEGUARDS)
5TH FLOOR, 'D' BLOCK, I.P. BHAWAN
NEW DELHI
NOTIFICATION
F. No. SG/INV/1/2002          Dated:  14 March 2002
Notice of Initiation of a Safeguard Investigation
Under Rule 6 of the Customs Tariff (Identification and Assessment
of Safeguard Duty) Rules, 1997
Subject:  Initiation of Safeguard Investigation concerning
imports of Epichlorohydrin (ECH) into India
1. An application has been filed before me under Rule 5 of the Customs Tariff (Identification
and Assessment of Safeguard Duty) Rules, 1997 by Tamilnadu Petroproducts Limited (TPL), Chennai
for imposition of Safeguard duty on imports of Epichlorohydrin (ECH) into India to protect domestic
producers of ECH against serious injury caused by the increased imports of ECH into India.
2. Domestic industry
The application has been filed by TPL on behalf of the domestic producers of ECH for
imposition of safeguard duty on imports of ECH.  TPL is the only producer of ECH accounting for the
total domestic production.
3. Product involved
The applicants have alleged serious injury caused to the domestic producers by the increased
imports of ECH into India.  ECH is classified under sub-heading No. 2910.30 of the First Schedule to
the Customs Tariff Act 1975 and under 29103000 of the Indian Trade Classification (ITC), and is a
basic organic chemical with chemical formula CH 2-CH-CH-CH 2CL.  The applicants produce ECH by
Chlorine addition to Propylene which is akin to international standards of manufacturing.  ECH is
produced by obtaining Allyl Chloride by direct chlorination of Propylene in gaseous phase at elevated
temperatures.  Chlorohydrination of Allyl Chloride is carried out in aqueous medium using Chlorine
to obtain Dichlorohydrin.  Further hydrolysis of Dichlorohydrin is carried out at boiling temperature
of water using lime as a saponifying agent.  Hydrolysing reaction is accomplished in a stripping towerwhere ECH is stripped.  The raw ECH is rectified in fractionation system.  ECH is a petrochemical
used as a key raw material in the manufacture of Epoxy Resins, Pesticides and certain pharmaceutical
formulations.
4. Increased imports
ECH is imported into India mainly from Belgium, Germany, Japan, Korea (Rep. of) and the
United States.  The imports have shown an increase in absolute terms as well as compared to domestic
production.  The imports and domestic production of ECH during 1997-98 to 2001-02 (up to January)
have been as under:G/SG/N/6/IND/12
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Year Domestic production Imports (MT) Imports as a percentage of
domestic production
1996-97 3,595 761 21.17
1997-98 2,349 1,931 82.20
1998-99 951 2,933 308.41
1999-00 951 4,614 485.17
2000-01 3,620 4,294 118.61
2001-02 (Jan) 2,997 3,846 128.32
5. Injury
The increased imports of ECH have caused/threatened to cause serious injury to the domestic
producers of ECH as indicated by the following factors:
(a) International prices of ECH have been steadily falling.  The price of ECH during the
last five years has fallen almost by 30 per cent.  To keep up with this fall in the
international price and to retain their market share, the domestic producer had to
reduce their prices of ECH and as a sequel their net price realizations have declined
considerably and resulted in loss to the domestic producer.
(b) The capacity utilization of domestic producer which was about 36 per cent in 1996-97
declined to 9.5 per cent during 1998-2000 and has remained stagnant at about 36 per
cent during the last two years.
(c) The closing stocks of the domestic producer of ECH which decreased from 1,235 MT
in 1997-98 to 144 MT in 1999-2000 increased to 560 MT at the end of March 2001.
(d) The market share of the domestic producer of ECH in the total domestic consumption
of ECH which was about 70 per cent in 1996-97 declined to 32 per cent in 2001-02 as
indicated in the table below.  The domestic producers have been able to retain this
reduced market share only at the cost of reduction of their sales price.  The net salesrealization per MT of ECH dropped by Rs. 75,363 in 2000-01 to Rs. 65,479 in
2001-02, i.e. a drop of about 12 per cent.
Year
(1)Domestic sales
(including captive
consumption)
(2)Total domestic
consumption including
imports
(3)Share of domestic
production in total domestic
consumption (2/3 x 100%)
1996-97 1,785 2,546 70.10
1997-98 1,389 3,320 41.83
1998-99 1,241 4,174 29.73
1999-00 1,296 5,910 21.92
2000-01 1,739 6,033 28.82
2001-02
(January)1,816 5,662 32.07
6. The domestic producers have requested for imposition of safeguard duty on imports of ECH.
They have also requested for an immediate imposition of provisional safeguard duty.
7. The application has been examined and it appears that prima facie increased imports of ECH
have caused/threatened to cause serious injury to the domestic producers of ECH and accordingly it
has been decided to initiate an investigation through this notice.G/SG/N/6/IND/12
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8. All interested parties may make their views known by 26 April 2002 to:
The Director General (Safeguards)
5th Floor, Drum Shape Building
I.P. Bhawan, I.P. Estate
New Delhi-110002
India
9. All known interested parties are also being addressed separately.10. Any other party to the investigation who wishes to be considered as an interested party may
submit its representation so as to reach the Director General (Safeguards) within 21 days from the
date of this notice.
   (Signed)
R.K. GUPTA
Director General (Safeguards)
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