WORLD TRADE G/SG/N/6/IND/3
27March 1998
ORGANIZATION(98-1226)
Original: English Committee onSafeguards
NOTIFICATION UNDER ARTICLE 12.1(A) OFTHE
AGREEMENT ONSAFEGUARDS ONINITIATION OF
ANINVESTIGATION AND THE REASONS FOR IT
INDIA
Thefollowing communication wasreceived on25March 1998 from thePermanent Mission
ofIndia.
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NOTICE OFINITIATION OFASAFEGUARD INVESTIGATION
(Under Rule6oftheCustoms Tariff (Identification andAssessment ofSafeguard Duty)
Rules, 1997)
NewDelhi, 26February 1998
No.SG/INV/4/1997
Subject: Initiation ofSafeguard Investigation concerning Imports ofFlexible Slabstock Polyol of
molecular weight 3000-4000 usedinthemanufacture ofslabstock foams andpolyurethane
foam mattresses intoIndia
1. Anapplication hasbeenfiledbefore meunder rule5oftheCustoms Tariff (Identification and
Assessment ofSafeguard Duty) Rules, 1997, byManali Petrochemicals Ltd., Chennai andSPIC
Organics Ltd., Chennai forimposition ofsafeguard dutyonimports ofFlexible Slabstock Polyol into
India toprotect thedomestic producers ofFlexible Slabstock Polyol against serious injury caused by
theincreased imports ofFlexible Slabstock Polyol intoIndia.
2. Domestic industry: Theapplication hasbeenfiledbyManali Petrochemicals Ltd., Chennai
andSPIC Organics Ltd., Chennai whoaretheonlydomestic producers ofFlexible Slabstock Polyol
accounting forthetotaldomestic production ofFlexible Slabstock Polyol.
3. Product involved: Theapplicants havealleged serious injury caused tothedomestic producers
bytheincreased imports ofFlexible Slabstock Polyol ofmolecular weight 3000-4000 usedinthe
manufacture ofslabstock foams andpolyurethane foammattresses intoIndia. Flexible Slabstock Polyol
classified under sub-heading no.3907.20 oftheFirstSchedule totheCustoms Tariff Act,1975, and
39072000 oftheIndian Trade Classification, ischemically polyether polyol, aviscous, colourless liquid,
manufactured through propaxylation ethoxylation ofpolyhydric alcohol (starters) using liquid catalyst.
Itisusedinthemanufacture offlexible urethane slabstock foams.
4. Increased imports: Flexible Slabstock Polyol isimported intoIndia from Germany, Japan,
Netherlands, Singapore, Thailand andtheUnited States. Theimports haveshown anincreasing trendG/SG/N/6/IND/3
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inabsolute terms aswellascompared todomestic production. Theimports anddomestic production
ofFlexible Slabstock Polyol during 1994-95 to1997-98 (April-August) havebeenasunder:
Year Domestic production
(MT)Imports (MT) Imports aspercentage
ofdomestic production
1994-95 5,762 103.11 1.79
1995-96 6,831 502.11 7.35
1996-97 7,050 1,019.75 14.47
1997-98
(April-Aug.)1,122 2,514.70 224.46
5. Injury: Theincreased imports ofFlexible Slabstock Polyol havecaused andhavefurther
threatened tocause serious injury tothedomestic producers ofFlexible Slabstock Polyol asindicated
bythefollowing factors:
(a) Production: theproduction ofFlexible Slabstock Polyol which increased from
5,762MTin1994-95to6,831MTin1995-96and7,050MTin1996-97hasdrastically
fallen down to1,122 MTinthefirstfivemonths of1997-98 showing adecline of
61.8percentinproduction onaproratabasis.
(b) Sales:salesofFlexibleSlabstockPolyolwhichreachedapeakof7,133MTin1996-97
hasgonedown to657MTinthefirstfivemonths of1997-98 i.e.saleshavefallen
by77.89 percentinthefirstfivemonths of1997-98 ascompared tothesales of
1996-97 onaproratabasis. Theapplicants havebeenabletomaintain thisreduced
share inthedomestic market onlyatareduced average selling price which hasfallen
down from Re81,331 perMTtoRe74,800 perMTinthecorresponding period.
(c) Stocks: evenatdrastically reduced levelofproduction, thestocks haveaccumulated
by846MTattheendofAugust 1997, ascompared to373MTattheendof
March 1997.
(d) Capacity utilization: keeping withproduction, capacity utilization which reached a
peakof50percentin1996-97 hascome down to19percentduring thefirstfive
months of1997-98 i.e.ithasfallen by31percentage points.
(e) Lossofprofit: boththecompanies arelikely toincur cashlosses causing erosion
ofthenetworth ofthecompanies, SPIC Organics Ltd.hasalready attracted the
provisions ofBIFR.
(f) Surplus capacity setupabroad: thedomestic producers arealsofacing athreat of
further serious injury fromsetting upoflargecapacity plants closer toIndiawhohave
access torawmaterials atprices much lower thaninIndia.G/SG/N/6/IND/3
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Thetablebelowshowscapacity,capacityutilization,production,sales,closingstockandaverage
selling price ofFlexible Slabstock Polyol for1994-95 to1997-98 (April toAugust).
Year Installed
capacity
(MT)Capacity
utilizationProduction
(MT)Sales
(MT)Closing
stocks
(MT)Average
selling
price
(Re/MT)
1994-95 14,000 41% 5,762 5,937 137 83,018
1995-96 14,000 49% 6,831 6,500 402 92,612
1996-97 14,000 50% 7,050 7,133 373 81,331
1997-98
(April-Aug.)5,833 19% 1,122 657 846 74,800
6. Thedomestic producers have requested forimposition ofsafeguard dutyonimports of
Flexible Slabstock Polyol ofmolecular weight 3000-4000 usedinthemanufacture ofslabstock foams
andpolyurethane foammattresses foraperiod oftwoyears. Theyhavealsorequested foranimmediate
imposition ofprovisional safeguard duty.
7. Theapplication hasbeenexamined anditisfound thatprima facieincreased imports ofFlexible
Slabstock Polyol havecaused andfurther threatened tocause serious injury tothedomestic producers
ofFlexible Slabstock Polyol andaccordingly ithasbeendecided toinitiate aninvestigation through
thisnotice.
8. Allinterested parties maymake theirviews known by13April 1998 to:
TheDirector-General (Safeguards)
5thFloor, D-Block,
Indraprastha Bhawan, I.P.Estate
NewDelhi -110002
India
9. Allknown interested parties arealsobeing addressed separately.
10. Anyother party totheinvestigation whowishes tobeconsidered asaninterested party may
submit itsrequest soastoreach theDirector-General (Safeguards) within 21daysfrom thedateof
thisnotice.
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