WORLD TRADE G/SG/N/6/IND/2
18March 1998
ORGANIZATION(98-1082)
Original: English Committee onSafeguards
NOTIFICATION UNDER ARTICLE 12.1(A) OFTHE
AGREEMENT ONSAFEGUARDS ONINITIATION OF
ANINVESTIGATION AND THE REASONS FOR IT
INDIA
Thefollowingcommunication,receivedon17March1998,hasbeenreceivedfromthePermanent
Mission ofIndia.
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NOTICE OFINITIATION OFASAFEGUARD INVESTIGATION
(Under Rule6oftheCustoms Tariff (Identification andAssessment ofSafeguard Duty)
Rules, 1997)
NewDelhi, 5February 1998
No.SG/INV/3/1997
Subject: Initiation ofSafeguard Investigation concerning Imports of'Carbon Black 'intoIndia
1. Anapplication hasbeenfiledbefore meunder rule5oftheCustoms Tariff (Identification and
Assessment ofSafeguard Duty) Rules, 1997, bythe'Association ofCarbon Black Manufacturers 'on
behalf ofM/sCabot India Ltd., Mumbai, M/sHitech Carbons, Renukot, M/sOriental Carbon and
Chemicals Ltd., Ghaziabad, andM/sPhillips Carbon Black Ltd., Calcutta forimposition ofsafeguard
dutyonimports ofCarbon Black intoIndia toprotect thedomestic producers ofCarbon Black against
serious injury caused bytheincreased imports ofCarbon Black intoIndia.
2. Domestic industry: Theapplication hasbeen filed bythe'Association ofCarbon Black
Manufacturers 'onbehalf oftheabove-mentioned fourdomestic producers ofCarbon Black. There
aresixdomestic producers ofCarbon Black accounting foratotaldomestic production of245,897 MT
(1996-97). Theapplicants named above account for233,762 MT(1996-97) which constitutes amajor
proportion ofthedomestic production.
3. Product involved: Theapplicants havealleged serious injury caused tothedomestic producers
bytheincreased imports of'Carbon Black forrubber industry 'intoIndia. 'Carbon Black forrubber
industry 'classified under sub-heading No.2803.00 oftheFirstSchedule totheCustoms Tariff Act,
1975, andunder 28030002 oftheIndian Trade Classification (ITC) isaformofCarbon. Carbon Black
usedmainly byrubber industry, including thetyreindustry, istheproduct under investigation.
4. Increased imports: Carbon Black isimported intoIndia from Australia, Belgium, Canada,
China, Chinese Taipei, Egypt, France, Germany, Indonesia, Iran,Japan, Korea Rep.of,Netherlands,
Singapore, Thailand, United ArabEmirates, United Kingdom andtheUnited States. Theimports haveG/SG/N/6/IND/2
Page2
shown anincreasing trend inabsolute terms aswellascompared todomestic production. Theimports
anddomestic production ofCarbon Black forrubber industry during 1994-95 to1997-98 (April-
September) havebeenasunder:
Year Import ofCarbon Black
(MT)Total domestic
production ofCarbon
Black (MT)Import aspercentage of
domestic production
1994-95 28,927 180,093 16.06
1995-96 16,788 225,644 7.44
1996-97 17,773 245,897 7.22
1997-98
(April-Sept.)28,917 102,629 28.18
Theapplicants havestated thatin1993-94 and1994-95 there wasahugeincrease inimports
because thethenimport policy permitted dutyfreeimport ofCarbon Black against Value Based Advance
ImportLicences(VABAL)andthetyreindustryconcentratedonimportofCarbonBlackagainstVABAL
licences. InAugust 1993, thedutyfreeimports ofCarbon Black against VABAL licences weresubjected
tobothquantity andvalue limits. Thebacklog oflicences already issued had,however, itsimpact
onimports upto1994-95. Theimports settled down toaround 17,000 MTin1995-96 and1996-97.
From thequarter October-December 1996, however, theimports havestarted increasing substantially
atreduced prices asisindicated inthetablebelow.
Quarter Imports (MT) Imports Re/MT
October-December 1996 3,662 20,204
January-March 1997 10,199 19,640
April-June 1997 13,071 19,096
July-September 1997 15,487 18,282
5. Injury: Theincreased imports ofCarbon Black havethreatened tocause serious injury to
thedomestic producers ofCarbon Black asindicated bythefollowing factors:
(a) Production: theproduction ofCarbon Black which reached apeakof245,897 MT
in1996-97 hascome down toalevelof102,629 MTinthefirstsixmonths of1997-98
resulting inafallof16.5percentinproduction onaproratabasis;
(b) Capacity utilization: keeping withtheproduction, capacity utilization alsoreached
apeakof80.35 percentin1996-97 which hascome down to66.64 percentduring
thefirstsixmonths of1997-98 resulting inalossof13.71 percentage points ofcapacity
utilization;
(c) Sales: thefourapplicant companies haveregistered lossofdomestic saleswhich has
fallen down from 187,250 MTin1996-97 to80,212 MTinthefirstsixmonths of
1997-98, which works outto42.84 percentof1996-97 sales, i.e.alossof
7.16percentage points (onaproratabasis). Thefourapplicant companies havebeen
abletomaintain thisreduced share indomestic market onlyatareduced average sellingG/SG/N/6/IND/2
Page3
price which hasfallen down from Re28,404 perMTtoRe26,370 perMTinthe
corresponding period;
(d) Lossofprofit: thefourapplicant companies in1997-98 (April-September) produced
Carbon Black atacostofproduction ofRe24,460 perMT,soldwithanaverage sales
realization ofRe26,370 perMTasagainst acostofproduction ofRe22,458 perMT,
soldwithanaverage sales realization ofRe28,404 perMTin1996-97. Thefour
applicant companies havethusregistered areduction inprofits;
(e) Surplus capacities: thefourapplicant companies havealleged availability ofsurplus
capacities ofCarbon Black inAsia-Pacific region ascompared tothedemand.
Thetablebelow shows capacity, capacity utilization, production, salesandaverage selling price
ofthedomestic industry for1994-95 to1997-98 (April toSeptember).
Year Installed
capacityCapacity
utilization
(%)Production Sales of
applicantsAverage
selling price
ofapplicants
1994-95 280,834 64.12 180,093 165,254 19,945
1995-96 280,834 80.34 225,644 170,847 25,957
1996-97 306,000 80.35 245,897 187,250 28,404
1997-98
(Apr.-Sept.)154,000 66.64 102,629 80,212 26,370
6. Thedomestic producers have requested forimposition ofsafeguard dutyonimports of
'Carbon Black forrubber industry 'foraperiod offouryears. They have alsorequested foran
immediate imposition ofprovisional safeguard duty.
7. Theapplication hasbeenexamined anditisfound thatprima facieincreased imports ofCarbon
Black havethreatened tocause serious injury tothedomestic producers ofCarbon Black andaccordingly
ithasbeendecided toinitiate aninvestigation through thisnotice.
8. Allinterested parties maymake theirviews known by23March 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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