WORLD TRADE  
ORGANIZATION   
G/SG/N/6/IND/29 
18 August 2011 
 (11-4124) 
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 
 
(Phthalic Anhydride) 
   The following communication, dated 16 August 2011,  is being circulated at the request of the 
Delegation of India. 
 
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An application has been filed before me under Rule 5 of the Customs Tariff (Identification 
and Assessment of Safeguard Duty) Rules, 1997 by  M/s. Thirumalai Chemicals Ltd., Ranipet, 
Tamilnadu, M/s. IG Petrochemicals Ltd., Raigad, Maharashtra, M/s. Mysore Petrochemicals Ltd., 
Raichur, Karnataka for imposition of Safeguard Duty on imports of Phthalic Anhydride into India to 
protect the domestic producers of Phthalic Anhydr ide against serious inju ry caused by the increased 
imports of Phthalic Anhydride into India. 
 
1. Domestic Industry 
 
 The application has been filed by M/s Thir umalai Chemicals Ltd., Ranipet, Tamilnadu, 
M/s. IG Petrochemicals Ltd., Raigad, Maharashtr a, M/s. Mysore Petrochemicals Ltd., Raichur, 
Karnataka for imposition of Safeguard Duty on import s of Phthalic Anhydride.  The application has 
been made by three of the five domestic producers of Phthalic Anhydride in India accounting for 86% 
of the total  production. 
 
2. Product Involved 
 
 The applicants have alleged serious injury caused to the domestic producers by the increased 
imports of Phthalic Anhydride into India.  Phthalic Anhydride classified under sub-heading 
No. 29173500 of Schedule I of the Customs Tariff  Act 1975, is the principal commercial form of 
Phthalic Acid.  It is produced by catalytic oxidation of Ortho-xylene (OX) or Naphthalene.  It is used 
in production process of various chemicals, which u se the same characteristic properties of Phthalic 
Anhydride.  It is an important chemical intermediate in plastic industry.  
 
3.  Increased Imports  
 
Phthalic Anhydride is imported into India fro m a number of countries, and primarily from 
Republic of Korea, Israel, Iran and Chinese Taipei.  The imports of Phthalic Anhydride have shown 
an increasing trend in absolute te rms as well as compared to the domestic production.  The imports G/SG/N/6/IND/29 
Page 2  
 
  and domestic production of Phthalic Anhydride during  Q4 of 2008-09 to April-May 2011 remained as 
under:  
Financial Year Quarter Total Imports 
(MT) Domestic Production 
(MT) 
2008-09 Q4 6,103 49,607 
2009-10 Q1 7,240 47,985 
  Q2 5,163 58,259 
  Q3 8,526 40,437 
  Q4 7,169 52,853 
2010-11 Q1 23,615 55,503 
  Q2 8,611 58,168 
  Q3 18,082 52,319 
  Q4 11,657 51,271 
2011-12 April-May 9,188 35,716 
  The Imports have increased from 28,098 MT 2009- 10 to 61,965 MT in 2010-11 which shows an 
increase of 121% which is phenomenal.  Further the import with respect to domestic production was 
14.08% in 2009-10 and increased to 28.52% in 2010-11. 
 
4.  Injury  
 
The increased imports of Phthalic Anhydride have  caused and are threatening to cause serious 
injury to the domestic producers of Phthalic An hydride as indicated by the following factors: 
 
(a)  Production :  The domestic production has been falling steadily from 58,259MT in 
Quarter 2 (2010-11), then 52,319 MT in Quarter 3 (2010-11) & further  to 51,271MT in Q4 (2010-11) and finally to 50,124 MT in Q1 (2011-12) .  
 
(b)  Capacity Utilization : Capacity utilization of the domestic industry has declined 
significantly in the most recent period, from 87% in Q2 of 2010-11 to 75% in Q1 of 
2011-12.  The plant of Mysore Petrochemi cals is at present under shutdown for an 
indefinite period w.e.f 20.06.2011 du e to accumulation of high stocks.  
 (c)  Share of domestic producers in domestic consumption : Market share of domestic 
producers has fallen significantly.  Applicants had a market share of 75% in 2009-10 
which fell to 69% during 2010-11.  The market share of the applicants further 
declined to 64% in Q1 (Apr-May 2011).  
 
5.   The domestic industry has requested for immediate imposition of safeguard measures for a 
period of one year in their application.  The domes tic industry's request for imposition of provisional 
safeguard duty for one year is in light of criti cal circumstances including steep deterioration in 
performance of the domestic industry both in terms of increasing financial losses and near doubling of 
inventories in 2011-2012 from the 2009-2010 level.  
 
6.   The application has been examined and it is found that prima facie  increased imports of PAN 
(Phthalic Anhydride) have caused and are threat ening to cause serious injury to the domestic 
producers of PAN and such increase in imports has caused irreparable damage to the domestic 
industry and accordingly, it has been decided to initiate an investigation through this notice.  
  G/SG/N/6/IND/29 
 Page 3 
 
 
  7. All interested parties may make their views known within a period of 30 days from the 
date of this notice to : 
 
The Director General (Safeguards)  Bhai Vir Singh Sahitya Sadan: 2nd Floor  
Bhai Vir Singh Marg  
Gole Market, New Delhi-110 001, INDIA  Telefax: 011-23741542/ 23741537  E-mail: dgsafeguards@nic.in  
8. All known interested parties are also being addressed separately. 
 
9.   Any other party to the investigation who wish es to be considered as an interested party 
may submit its request so as to reach the Director General (Safeguards) on the aforementioned 
address within 21 days from the date of this notice.  
 
 
      (Indrani Dutt Majumder) 
Director General 
 
 
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