WORLD TRADE  
ORGANIZATION  G/SG/N/7/IND/1/Suppl.1 
G/SG/N/11/IND/2 20 January 2009 
 
(09-0228) 
Committee on Safeguards Original:   English 
  
 
NOTIFICATION UNDER ARTICLE 12.4 OF THE AGREEMENT ON 
SAFEGUARDS BEFORE TAKING A PROVISIONAL SAFEGUARD 
MEASURE REFERRED TO IN ARTICLE 6 
 
NOTIFICATION PURSUANT TO ARTICLE 9,  
FOOTNOTE 2, OF THE AGREEMENT ON SAFEGUARDS 
 
INDIA 
 
(Phthalic Anhydride)
 
 
  The following communication, dated 16 January 2 009, is being circulated at the request of the 
Delegation of India.    
_______________ 
 
  We enclose a notification pursuant to Article 12.4 of the Agreement on Safeguards , before 
taking provisional safeguard measures for imports of Phthalic Anhydride (incorporating an offer of 
consultations under that Article); and a notifica tion pursuant to Article 9, footnote 2 of the Agreement 
on Safeguards,  on taking a decision not to apply those measur es to products originating in developing 
countries.   
 
 
NOTIFICATION UNDER ARTICLE 12.4 BEFORE TAKING 
PROVISIONAL SAFEGUARD MEASURES 
 
1. Specify the product subject to the proposed provisional safeguard measure 
 
 The products namely Phthalic Anhydride cl assified under 29173500 of HSN and 29173500 of 
Schedule I of the Customs Tariff Act, 1975.   
 
2. Specify the proposed safeguard measure 
 
 Ad valorem Safeguard Duty of 25 per cent.   
 3. Specify the proposed date of introduction of the provisional safeguard measure 
 
 The Directorate General of Safeguards has recommended for imposition of Safeguard Duty 
on 1 January 2009.  The approval of the Central Government is awaited.   G/SG/N/7/IND/1/Suppl.1 
G/SG/N/11/IND/2 Page 2 
 
 
  4. Specify the expected duration of the provisional safeguard measure, if any decision on 
the duration of the measure has been made 
 
 Two hundred (200) days.   
 
5. Provide the basis for Making a preliminary determination, as provided for in Article 6, 
that increased imports have caused or are threatening to cause serious injury;  and 
determining that there are critical circu mstances where delay would cause damage 
which it would be difficult to repair 
 
 The Directorate General of Safeguards carried out a study in response to the application 
submitted by the domestic industries in order to dete rmine whether there was serious injury to the 
domestic industry, within the meaning of the Ag reement on Safeguards, in connection with the 
product defined in point 1 of this notification.  The results of the study are recorded in the Notification 
dated 1 January 2009 and published in the Offi cial Gazette of India on the same day.   
  The analysis shows that the application contains  sufficient evidence of serious injury to the 
domestic industry caused by imports, thereby meeting th e conditions laid down by the rules in force to 
implement possible provisional safeguard measures.    
 The above-mentioned conclusion is based  on the following considerations:   
 
a) Increased Imports :  There has been increasing trend in import in absolute term from 
the year 2004-05 except in 2006-07.  Taking b ase year as 2004-05, the import has increased 
by 22.92 per cent in 2005-06, declined by 27.8 8 per cent in 2006-07, increased by 60 per cent 
in 2007-08 and further increased by 128 per cen t in 2008-09 (taking annualized figure as well 
as monthly figures).  The import figures year wise are mentioned below:   
   
 
 
    
 
   Similarly, the share of imports in the dom estic market has gone up from 7 per cent in 
2006-07 to 12 per cent in 2007-08 and 13 per cent in  the first half of 2008-09.  The detailed 
statistics is mentioned below:   
 
    
 
     Quantity 
(MT) Value  
(Rs. in lacs) Price  
Rs. PMT) 
2004-05 19,599 8,105 41,357 
2005-06 24,092 10,061 41,763 
2006-07 14,133 7,192 50,887 
2007-08 31,441 16,417 52,218 
2008-09 
(first five 
months) 18,665 10,366 55,539  G/SG/N/7/IND/1/Suppl.1 
 G/SG/N/11/IND/2 
 Page 3 
 
 
    (Figures in MT) 
The imports of PAN into India have th us increased in absolute terms.   
 
b) Unforeseen Developments:  From the data available with the Directorate it is seen 
that the difference between the import prices of PAN (final product) and OX (raw material) have reduced from US$ 210 per MT to US$ 50 pe r MT and in some cases raw material prices 
were more than the prices of final products.  One of the reasons for the sudden fall in import 
prices of PAN is collapse of domestic market  in Korea and collapse of traditional export 
market of China and US and the consequent desperate offloading of the piled-up stocks.  
Korea being the biggest supplier of PAN to India and devaluation of Korean Wan by around 41 per cent - from 941 Korean Won per USD in January 2008 to 1326 Korean Won per USD in October 2008 has had its effect on making increased import at fallen prices to India.  It has further been observed that the unprecedented uneven recession in various countries has led to 
increased import of PAN to India.   
 c) Serious Injury and Threat of Serious Injury:  The data available with the 
Directorate indicate that the prices of PAN came down to US$ 1330 PMT during August 2008.  It further went down to US$ 118 0 during September 2008.  It showed a further 
down trend and touched UD$ 650 PMT during October 2008.  As on 7
 November 2008, 
prices of PA are ruling around US$ 570 PMT.  In  the past four months, prices of imported 
PAN have come down from US$ 1580 PMT to US$ 570 PMT – recording a fall of 64 per cent.  Three domestic producers have shut down their plant.  The production capacity of PAN is 2.5 Lacs MTon in India and 77.5 per cent of capacity is shut down.  The statistics relating to production and capacity utilization is below:   
 
 2005-06 2006-07 2007-08 2008-09 
HY-I 
Installed capacity  
Thirumalai Chemicals 87000 100000 110000 62500 
IG Petro 110000 110000 110000 55000 
Mysore Petro 12000 12000 12000 6000 
SI Group 11000 11000 11000 5500 
Total for Applicants 220000 233000 243000 129000 
Asian Paints 24000 25200 25200 12600 
Grand Total 244000 258200 268200 141600   2005-06 2006-07 2007-08 2008-09 
(First half)
Imports 1 24,092 14,133 31,441 22,398
Domestic production 2 168,596 201,095 220,168 101,483
Total quantity 
available 3=(1+2) 192,688 215,228 251,609 127,262
Share of imports 4=(1/3) 13% 7% 12% 13%
Share of domestic 
production 5=(2/3) 87% 93% 88% 87%
Sales by Domestic 
Industry 6 118,308 142,471 153,055 77,540
Consumption in India 7=(1+6) 142,400 156,605 184,496 99,938
Market share of  - - - 
 Imports 8=1/7 17% 9% 17% 22%
 Domestic industry 9=(6/7) 83% 91% 83% 78%G/SG/N/7/IND/1/Suppl.1 
G/SG/N/11/IND/2 Page 4 
 
 
   
 2005-06 2006-07 2007-08 2008-09 
HY-I 
Actual Production 
Applicants  168596 201095 220168 101483 
Asian Paints 23041 21864 24261 12131 
Total Production 191637 222959 244429 113614 
Capacity Utilisation 77% 86% 91% 79% 
 
Domestic Producer Date of shut down 
Thirumalai Chemicals 8 October 2008 
S I Group 11 October 2008 
IG Petrochemicals 25 October 2008 
Mysore Petrochemicals 1 November 2008 
 
 Domestic producers had a stock of approximate ly 9500 MT at the time of closure of their 
respective plants.  They are not able to sell tho se goods even at cost and funds to the extent of 
Rs. 61.23 crore have been blocked on this account al one.  On the date of closure of plants, more 
than 20000 MT of OX – the raw material worth over Rs.120 crores was lying in stock.  Funds to 
that extent may remain blocked until production is resumed.   
  As various plants are closed, the employed personnel have been re ndered idle and people 
depended on businesses incidental to manufacture of PAN unemployed.    
 The trend in fall of import prices and current economic scenario where the demands are 
falling in other countries, gives rise to threat of serious injury to domestic producers.   
 
d) Causal Link between Increased Import and Serious Injury or Threat of Serious 
Injury:  Imports are increasing and taking the share of domestic market.  At the same time the 
domestic industries have cut production and some of the units are closed.  The preliminary 
determination shows that the serious injury and th reat of serious injury is attributable to the 
increased import.    e) Adjustment Plan:   The domestic producers have proposed measures for reduction in 
costs of manufacture, reduction in selling cost by reduction in commission and reduction in 
administrative expenses. 
 f) Critical Circumstances:   The capacity utilization of th e domestic producers had been 
79 per cent compared to 91 per cent during the period 2007-08.  The capacity utilization has 
further fallen to 22 per cent in s ubsequent months as substantial cap acity is shut down.  Moreover, 
the loss of production, loss of sales, inventory built up and severe loss of man days along with 
loss of employment indicate critical circumstances.     In view of the above, critical circumstances exist justifying imposition of provisional safeguard duties immediately in order to save the domestic producers from damage which it 
would be difficult to repair if the appli cation of safeguard measure is delayed.   
  G/SG/N/7/IND/1/Suppl.1 
 G/SG/N/11/IND/2 
 Page 5 
 
 
  6. Offer of consultations under Article 12.4 
 
 The Government of India offers consultati ons on the provisional safeguard measures at any 
time after 1 January  2009.   
 
7. Other information 
 
 The notification on the recommendation of th e provisional safeguard measure was published 
in the Official Gazette of India on 1 January 2009.    G/SG/N/7/IND/1/Suppl.1 
G/SG/N/11/IND/2 Page 6 
 
 
  NOTIFICATION UNDER ARTICLE 9, FOOTNOTE 2, ON THE NON-APPLICATION OF 
SAFEGUARD MEASURE TO DEVELOPING COUNTRIES UNDER ARTICLE 9.1 
 
1. Specification of the measure 
 
 The proposed provisional safeguard measure c onsists of a 25 per cent Safeguard duty to be 
paid on imports of Phthalic Anhydride classi fied under 29173500 of HSN and 29173500 of 
Schedule I of the Customs Tariff Act, 1975.    2. Product subject to the measure 
 
 The proposed measure applies to Phthalic Anhydride classified under 29173500 of HSN and 
29173500 of Schedule I of the Customs Tariff Act, 1975.    3. Developing countries to which the measur e is not applied under Article 9.1 of the 
Agreement on Safeguards, and the import shares of these countries individually and collectively 
 
Imports of the products concerned originating in  any of the developing countries specified in 
Annex 1 shall not be subject to the provisional safeguard measures, except in the case of those 
products originating in those countries against whic h "Shall Apply" appears in column 3 of that 
annex 1.       G/SG/N/7/IND/1/Suppl.1 
 G/SG/N/11/IND/2 
 Page 7 
 
 
  ANNEXURE 1 
List of developing countries to which the pr ovisional measures apply or do not apply: 
 
Col.1 Col.2 Col.3 
1 Afghanistan Not Apply 
2 Algeria Not Apply 
3 Angola Not Apply 
4 Antigua and Barbuda Not Apply 
5 Argentina Not Apply 
6 Bahamas Not Apply 
7 Bahrain Not Apply 
8 Bangladesh Not Apply 
9 Barbados Not Apply 
10 Belize Not Apply 
11 Benin Not Apply 
12 Bhutan Not Apply 
13 Bolivia Not Apply 
14 Bosnia and Herzegovina Not Apply 
15 Botswana Not Apply 
16 Brazil Not Apply 
17 Brunei Darussalam Not Apply 
18 Burkina Faso Not Apply 
19 Burundi Not Apply 
20 Cambodia Not Apply 
21 Cameroon Not Apply 
22 Cape Verde Not Apply 
23 Central African Republic Not Apply 
24 Chad Not Apply 
25 Chile Not Apply 
26 China Not Apply 
27 Colombia Not Apply 
28 Comoros Not Apply 
29 Congo Not Apply 
30 Costa Rica Not Apply 
31 Coste d' lvoire Not Apply 
32 Cuba Not Apply 
33 Cyprus Not Apply 
34 Democratic People's Republic of Korea Not Apply 
35 Democratic Republic of the Congo Not Apply 
36 Djibouti Not Apply 
37 Dominica Not Apply 
38 Dominican Republic Not Apply 
39 Ecuador Not Apply 
40 Egypt Not Apply 
41 El Salvador Not Apply 
42 Equatorial Guinea Not Apply 
43 Eritrea Not Apply G/SG/N/7/IND/1/Suppl.1 
G/SG/N/11/IND/2 Page 8 
 
 
  Col.1 Col.2 Col.3 
44 Ethiopia Not Apply 
45 Fiji Not Apply 
46 Gabon Not Apply 
47 Gambia Not Apply 
48 Ghana Not Apply 
49 Grenada Not Apply 
50 Guatemala Not Apply 
51 Guinea Not Apply 
52 Guinea-Bissau Not Apply 
53 Guyana Not Apply 
54 Haiti Not Apply 
55 Honduras Not Apply 
56 Indonesia Shall Apply 
57 Iran (Islamic Republic of) Not Apply 
58 Iraq Not Apply 
59 Jamaica Not Apply 
60 Jordan Not Apply 
61 Kenya Not Apply 
62 Kiribati Not Apply 
63 Kuwait Not Apply 
64 Lao People's Democratic Republic Not Apply 
65 Lebanon Not Apply 
66 Lesotho Not Apply 
67 Liberia Not Apply 
68 Libyan Arab Jamahiriya Not Apply 
69 Madagascar Not Apply 
70 Malawi Not Apply 
71  Malaysia Not Apply 
72 Maldives Not Apply 
73 Mali Not Apply 
74 Malta Not Apply 
75 Marshall Islands Not Apply 
76 Mauritania Not Apply 
77 Mauritius Not Apply 
78 Micronesia Not Apply 
79 Mongolia Not Apply 
80 Morocco Not Apply 
81 Mozambique Not Apply 
82 Myanmar Not Apply 
83 Namibia Not Apply 
84 Nepal Not Apply 
85 Nicaragua Not Apply 
86 Niger Not Apply 
87 Nigeria Not Apply 
88 Oman Not Apply 
89 Pakistan Shall Apply 
90 Palestine Not Apply 
91 Panama Not Apply  G/SG/N/7/IND/1/Suppl.1 
 G/SG/N/11/IND/2 
 Page 9 
 
 
  Col.1 Col.2 Col.3 
92 Papua New Guinea Not Apply 
93 Paraguay Not Apply 
94 Peru Not Apply 
95 Philippines Not Apply 
96 Qatar Not Apply 
97 Romania Not Apply 
98 Rwanda Not Apply 
99 St. Kitts and Nevis Not Apply 
100 St. Lucia Not Apply 
101 St. Vincent and the Grenadines Not Apply 
102 Samoa Not Apply 
103 Sao Tomo and Principe Not Apply 
104 Saudi Arabia Not Apply 
105 Senegal Not Apply 
106 Seychelles Not Apply 
107 Sierra Leone Not Apply 
108 Singapore Not Apply 
109 Solomon Islands Not Apply 
110 Somalia Not Apply 
111 South Africa Not Apply 
112 Sri Lanka Not Apply 
113 Sudan Not Apply 
114 Suriname Not Apply 
115 Swaziland Not Apply 
116 Syrian Arab Republic Not Apply 
117 Thailand Shall Apply 
118 Togo Not Apply 
119 Tonga Not Apply 
120 Trinidad and Tobago Not Apply 
121 Tunisia Not Apply 
122 Turkmenistan Not Apply 
123 Tuvalu Not Apply 
124 Uganda Not Apply 
125 United Arab Emirates Not Apply 
126 United Republic of Tanzania Not Apply 
127 Uruguay Not Apply 
128 Vanuatu Not Apply 
129 Venezuela Not Apply 
130 Vietnam Not Apply 
131 Yemen Not Apply 
132 Yugoslavia Not Apply 
133 Zambia Not Apply 
134 Zimbabwe Not Apply 
135 Mexico Not Apply 
 
 
__________