WORLD TRADE
ORGANIZATIONG/SG/N/6/IND/8
23 June 1999
(99-2551)
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 21 June, has been received from the Permanent Mission
of India.
_______________
Attached herewith is a copy of the Notice of Initiation of a Safeguard Investigation
(No. SG/INV/1/99 dated 16 June 1999) by the Director General (Safeguards) concerning imports of
"Acetone" into India.G/SG/N/6/IND/8
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OFFICE OF THE DIRECTOR GENERAL (SAFEGUARDS)
5th FLOOR, DRUM SHAPE BUILDING, I.P. BHAWAN
I.P. ESTATE, NEW DELHI
NOTICE OF INITIATION OF A SAFEGUARD INVESTIGATION
[Under Rule 6 of the Customs Tariff (Identification and Assessment
of Safeguard Duty) Rules, 1997]
F. No. SG/INV/1/99
New Delhi16 June 1999
Initiation of Safeguard Investigation Concerning Imports of Acetone 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 Hindustan Organic Chemicals Ltd. (HOC) and
Herdillia Chemicals Ltd. (HCL) for imposition of sa feguard duty on imports of Acetone into India to
protect the domestic producers of Acetone against serious injury caused by the increased imports of
Acetone into India.
2. Domestic industry.  The application has be en filed by Hindustan Organic Chemicals Ltd.
(HOC) and Herdillia Chemicals Ltd. (HCL) on behalf  of the domestic producers of Acetone for
imposition of safeguard duty on imports of Acetone.  There are eight domestic producers of Acetone
accounting for a total production of 42,618 MT of Acetone in 1998-99, out of which the applicants
produced 41,222 MT which constitutes a major proportion of the domestic production.
3. Product involved.  The applicants have alleged serious injury caused to the domestic
producers by the increased imports of Acetone into India.  Acetone classified under sub-heading
No. 2914.11 of the First Schedule to the Customs Tariff Act, 1975 and under 29141100 of the Indian
Trade Classification (ITC) is a basic organic chemical with chemical formula CH 3COCH 3.  The
applicants produce Acetone by the oxidation of Cu mene using air at elevated temperatures and
pressures.  Cumene is produced by the reaction between Propylene and Benzene.  Acetone is alsomanufactured through Isopropyl Alcohol and Alcohol- based routes.  Acetone is used in numerous
organic syntheses, either as an intermediate or as a solvent.  The chemicals manufactured from
Acetone include Isophorone, Diacetone Alcohol, Methyl Methacrylate and Bisphenol-A, certain
Rubber Chemicals, Oxyacetylene and Cellulose Acetate.  Acetone is also used as a solvent in the
manufacture of Paints/Coatings.
4. Increased imports.  Acetone is imported into India from Canada, China, Chinese Taipei,
France, Finland, Germany, Japan, Korea DPR, Korea Rep. of, the Netherlands, Russia, Saudi Arabia,
Singapore, South Africa, United  Kingdom and the United States.  The imports have shown an
increasing trend in absolute terms as well as compared to domestic production.  The imports anddomestic production of Acetone during 1994-95 to 1998-99 have been as under:G/SG/N/6/IND/8
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Year Domestic production
MTImports MT Imports as a percentage
of domestic production
1994-95 42,732 9,046 21.17
1995-96 49,556 18,519 37.37
1996-97 39,284 26,228 66.77
1997-98 44,261 16,866 38.11
1998-99 42,618 28,870 67.74
5. Injury.  The increased imports of Acetone have threatened to cause serious injury to the
domestic producers of Acetone as indicated by the following factors:
(a) Production.  The domestic production which increased from 39,284 MT in 1996-97 to
44,261 MT in 1997-98 has declined to 42,618 MT in 1998-99.
(b) Capacity utilization.  The capacity utilization of domestic producers which increased
from 56 per cent in 1996-97 to 61 per cent in 1997-98 has declined to 57 per cent in
1998-99.
(c) Share of domestic producers in domestic consumption.  The market share of domestic
producers of Acetone in the total domestic consumption of Acetone, which was about
68 per cent in 1996-97 and 1997-98 has declined to 59.21 per cent in 1998-99 as
indicated from 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 from Re 28 perkg. in March 1998, to Re 18 per kg. in March 1999, i.e. a decline of about 36 per cent
in the sale price which has seriously affected their profitability.
Year Domestic sales
(including captive
consumption)Total domestic
consumption including
importsShare of domestic
production in domestic
consumption (2/3 x
100%)
1234
1996-97 39,881 58,664 67.98
1997-98 43,601 64,882 67.20
1998-99 43,329 73,173 59.21
6. The domestic producers have requested the imposition of safeguard duty on imports ofAcetone.  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
Acetone have threatened to cause serious injury to the domestic producers of Acetone and accordinglyit has been decided to initiate an investigation through this notice.
8. All interested parties may make their views known by 26 July 1999 to:
The Director General (Safeguards)
5
th Floor, Drum Shape Building
I.P. Bhawan, I.P. Estate
New Delhi – 110 002
India
9. All known interested parties are also being addressed separately.G/SG/N/6/IND/8
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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)
__________