WORLD TRADE  
ORGANIZATION   
G/SG/N/8/IND/22/Suppl.2
G/SG/N/10/IND/13 
G/SG/N/11/IND/8 
16 April 2012 
 (12-1985) 
Committee on Safeguards Original:   English 
  
NOTIFICATION UNDER ARTICLE 12.1(B) OF THE AGREEMENT ON 
SAFEGUARDS ON FINDING SE RIOUS INJURY OR THREAT 
THEREOF CAUSED BY INCREASED IMPORTS 
 
NOTIFICATION OF A PROPOSAL TO 
IMPOSE A MEASURE 
 
NOTIFICATION UNDER ARTICLE 9, FOOTNOTE 2, 
OF THE AGREEMENT ON SAFEGUARDS 
 
INDIA 
 
Imports of Phthalic Anhydride 
 
  The following communication, dated 13 April 2012,  is being circulated at the request of the 
Delegation of India. 
_______________ 
 
 (In continuation of Notification No. G/SG/N/7/IND/9/Suppl.1-G/SG/N/8/IND/22/Suppl.1 
dated 21 February 2012) 
 
1. Evidence of Serious injury or th reat thereof caused by increased imports 
  Increased Imports : Phthalic Anhydride is imported into India from 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 abso lute terms as well as compared to the domestic 
production causing injury and serious threat of inju ry. The quantum of imports of Phthalic Anhydride 
during Q4 of 2008-09 to Q2 of 2011-12 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 10,933 51,271 
2011-12 Q1 9,752 50,124 
 Q2 10,436 51,220 G/SG/N/8/IND/22/Suppl.2 
G/SG/N/10/IND/13 G/SG/N/11/IND/8 
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There is a surge in import both in absolute and relative terms. Imports have increased from 
12,403 MT in Q1 & Q2 of 2009-10 to 20,188 MT in  Q1 &Q2 of 2011-12 showing an increase of 63% 
in absolute terms. Further, in the most recent peri od, the imports in Q2 of 2011-12 have increased to 
10,436 MT from 9,752 MT in Q1 of 2011-12 i.e. an increase of 7%. In relative terms also, though the 
share of import with respect to domestic productio n has shown decline in Q1-Q2 of 2011-12 from Q1-
Q2 of 2010-11, but in the recent period it increased i.e. from 19.45 % in Q1 of 2011-12 to 20.37 % in 
Q2 of 2011-12.  
It is thus seen that the volume of imports has su rged both in absolute terms as also in relation 
to production.  
 
Market Share : The share of imports in the domestic market with relation to production has 
gone up from 11% in Q4 of 2008-09 to 17%  in Q2 of 2011-12. Similarly, the share of imports in the 
domestic market with relation to consumption has also risen from 16% in Q4 of 2008-09 to 19%  in 
Q2 of 2011-12. It is also noticed that the market  share of domestic producers in domestic consumption 
& production has fallen significantly. Applicants had an average market share of 86% in Q1-Q2 of 
2009-10 which fell to 80% during Q1-Q2 of 2011-12, i.e. a decline of about 6%. The detailed chart showing increase in import’s market share vis- à-vis production and consumption of the domestic 
industry is given below: 
 
  
  2008-09 2009-10 2010-11 2011-12 
Q4 Q1 Q2 Q3 Q4 Q1  Q2 Q3 Q4 Q1 Q2 
Imports (MT) 6,103 7,240 5,163 8,526 7,169 23,615 8,611 18,082 10,933 9,752 10,436 
Domestic 
Production (MT) 49,607 47,985 58,259 40,437 52,853 55,503 58,168 52,319 51,271 50,124 51,220 
Total Qty. 
Available (MT) 55,710 55,225 63,422 48,963 60,022 79,118 66,779 70,401 62,204 59,876 61,656 
Share of Imports (%) 11 13 8 17 12 30 13 26 18 16 17 
Share of Domestic 
Production (%) 89 87 92 83 88 70 87 74 82 84 83 
Domestic Sales by  
Industry (MT) 32,613 35,530 41,289 39,427 40,696 39,817 51,007 38,941 44,553 38,149 44,670 
Consumption in India (MT) 38,716 42,770 46,452 47,953 47,865 63,432 59,618 57,023 55,486 47,901 55,106 
Market Share of Imports (%) 16 17 11 18 15 37 14 32 20 20 19 
Market Share of 
Domestic Industry 
(%) 84 83 89 82 85 63 86 68 80 80 81 
 
 Production:  The statistics relating to production pert aining to the domestic industry is shown 
above. The domestic production has been falling st eadily from 58,259 MT in Quarter 2 (2009-10), 
then 58,168 MT in Quarter 2 (2010-11) and finally to 51,220 MT in Q2 (2011-12). On annualized 
basis, production has declined in 2011-12 from 2010-11 level. 
 
Capacity Utilisation : Capacity utilization of the domestic industry has declined significantly 
in the most recent period, from 87% in Q2 of 2010-11 to 76% in Q2 of 2011-12. The plant of Mysore Petrochemicals is at present under shutdown for an indefinite period w.e.f 20.06.2011 due to 
accumulation of high stocks. The statistics relating to  capacity utilization pertaining to the domestic 
industry is shown below. 
   G/SG/N/8/IND/22/Suppl.2 
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Year Quarter Production 
(MT) Installed capacity 
(MT) Capacity 
utilisation 
(%) Inventory 
(MT) 
2008-09 Q4 49,607 59,528 83 5,365 
2009-10 Q1 47,985 67,028 72 1,604 
  Q2 58,259 67,028 87 6,101 
  Q3 40,437 67,028 60 487 
  Q4 52,853 67,028 79 4,530 
2010-11 Q1 55,503 67,028 83 4,468 
  Q2 58,168 67,028 87 2,484 
  Q3 52,319 67,028 78 9,232 
  Q4 51,271 67,028 76 5,718 
2011-12 Q1 50,124 67,028 75 8,131 
  Q2 51,220 67,028 76 8,405 
 
 Inventories: As the market share of the domestic industry is decreasing and that of imports 
are increasing, the domestic industry was unable to increase its sales volume and had to face the 
problems of accumulated inventories. The levels  of inventories have increased significantly 
throughout the injury period. The table above depicts the inventory build up from 4,530 MT in 2009-
10 to 5,718 MT in 2010-11 and further to 8,131 MT in Q1 (2011-12) and to 8,405 MT in Q2 (2011-
12), almost doubling in 2011-12 from the 2009-10 level,  reflecting the plight of the domestic industry. 
Further, the increase in inventories is despite su spension of production by one of domestic producers. 
 
 Domestic sale : The table below contains sales by domestic industry and total export.  
 
Year Quarter Domestic Sale (MT) Export (MT) 
2008-09 Q4 32,613 14,183 
2009-10 Q1 35,530 16,216 
  Q2 41,289 12,471 
  Q3 39,427 6,625 
  Q4 40,696 8,114 
2010-11 Q1 39,817 15,749 
  Q2 51,007 9,146 
  Q3 38,941 6,630 
  Q4 44,553 10,231 
2011-12 Q1 38,149 9,563 
  Q2 44,670 8,312 
  The Domestic sale grew from 41,289 MT in Quarter 2 (2009-10) to 51,007 MT in Quarter 2 
(2010-11) but declined thereafter to 44,670 MT in Q2 (2011-12). On annualized basis, production has 
declined in 2011-12 from 2010-11 level. Sales of the domestic industry increased till Quarter 4 (2010-
11) but declined during Q1 (2011-12). The reason of increase in sales volume till Q4, 2010-11 has been explained in the fact that one of the Indian  producers who is also the petitioner has shifted from 
EOU to DTA and started selling in the Indian market  which has led to increase in sales. The domestic 
industry claimed that since its EOU unit has become a DTA unit, it is natural that it is selling in the 
domestic market.   Employment:  There is no significant change in the level of employment and in productivity 
over the injury period. It has shown normal grow th over the period. Petitioner submits that these G/SG/N/8/IND/22/Suppl.2 
G/SG/N/10/IND/13 G/SG/N/11/IND/8 
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  parameters are dependent on a number of other para meters and not reflective of impact of imports on 
the domestic industry.  
 
Profit & Loss(Cash Profit): The profitability of the domestic industry has steeply 
deteriorated to such a situation that the domestic industry is now suffering financial losses. This is 
evident from the table below: 
 
Financial Year Rs. In Lakhs 
Profitability 
2009-10 2,583 
2010-11 (Q4) -378 
2011-12 (Q1) -384 
 2011-12 (Q2) -2,111 
 
 It is held that sharp increase in the price of  raw materials squeezed the profit margin of the 
domestic industry resulting in huge losses. Phtha lic Anhydride (PAN) is primarily produced from 
oxidation of Ortho-xylene. Due to increase in prices  of para-xylene, the producers shifted to the 
production from ortho-xylene to para-xylene which led to limited supply of ortho-xylene. Due to 
which the prices of ortho-xylene increased. The inte rnational prices of Ortho-Xylene have shown a 
steep rise between Feb. 2011 to April 2011 and thereafter have been steadily rising whereas the price of PAN remained same or at times, from May 201 1 onwards, declined in spite of increase in raw 
material cost and the trend of rising price gap continues in the recent period. These circumstances 
have resulted in huge financial losses suffered by th e domestic industry as they are not able to recover 
even the raw material cost. 
 
2. Precise description of the product involved  
 
Phthalic Anhydride (PAN) is classified under Customs sub-heading No. 29173500 under the 
Customs Tariff Act, 1975. 
 
3. Precise description of the proposed measure 
 
DG (Safeguards) has recommended for imposition of safeguard duty at the rate of 10% ad-
valorem in its final findings dated 29 March 2012. 
 
4. Proposed date of introduction of measure 
 
A decision regarding imposition of safeguard measures will be taken by the Central 
Government. 
 
5. Expected duration of the measure  
The DG (Safeguards) has recommended for im position of safeguard duty for one year. 
  G/SG/N/8/IND/22/Suppl.2 
 G/SG/N/10/IND/13 
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NOTIFICATION UNDER ARTICLE 9, FOOTNOTE 2, 
OF THE AGREEMENT ON SAFEGUARDS 
  
1. Specify the measure 
 
The final findings safeguard duty at the rate of 10% ad-valorem  when imported into India has 
been recommended by DG, Safegua rds, the competent authority.  
 
2. Specify the product subject to the measure  
Phthalic Anhydride (PAN) is classified under Customs sub-heading No. 29173500 under the 
Customs Tariff Act, 1975. 
 
3. Specify the developing countries to when the measure is not applied under Article 9.1 of 
the Agreement on Safeguards, and the impo rt share of these countries individually and 
collectively 
 
 As the imports from developing nations except Pakistan, China and Thailand do not exceed 
3% individually and 9% collectively, the import of product under consideration originating from 
developing nations except those mentione d above may not attract safeguard duty. 
 
 
__________