WORLD TRADE
ORGANIZATIONG/SG/N/6/IND/14
10 September 2002
(02-4743)
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 4 September 2002, has been received from the
Permanent Mission of India.
_______________
Attached herewith is a copy of the Notice of Initiation of safeguard proceedings
(No. SSG/INV/1/2002 dated 13 August 2002) issued by the Director General (Safeguards) againstimports of Industrial Sewing Machine Needles (ISMN) into India.G/SG/N/6/IND/14
Page 2
OFFICE OF THE DIRECTOR GENERAL (SAFEGUARDS)
5th FLOOR, 'D' BLOCK, I.P. BHAWAN
NEW DELHI
NOTIFICATION
F. No. SSG/INV/1/2002         Dated:  13 August 2002
Notice of Initiation of a Safeguard Investigation
{Under Rule 6 of the Customs Tariff (Transitional Product Specific
Safeguard Duty) Rules 2002}
Subject: Initiation of safeguard Investigation concerning imports of Industrial Sewing
Machine Needles (ISMN) into India originating from the People's Republic of China
1. An application has been filed before me under Rule 5 of the Customs Tariff (Transitional
Product Specific Safeguard Duty) Rules 2002, by M/s. Altek Lammertz Needles Ltd., Chennai
(hereafter referred to as Altek) for imposition of  safeguard duty on imports of ISMN into India from
the People's Republic of China to protect the domestic producers of ISMN against market disruption
caused by the increased imports of ISMN into India.
2. Domestic industry
The application has been filed by Altek on behalf of the domestic producers of ISMN for
imposition of safeguard duty on imports of ISMN.  Though there are three other companies reportedlyproducing ISMN, Altek accounts for the major production and sale of ISMN.
3. Product involved
The applicants have alleged market disruption caused to the domestic producers by the
increased imports of ISMN originat ing from China, P.R. into India.  ISMN is classified under sub-
heading No. 8452.30 of the First Schedule to the Customs Tariff Act 1975 and under 84523000 of theIndian Trade Classification (ITC).  The process of manufacturing ISMN involves more than a hundred
steps before emerging as a finished needle.  Needle making is a combination of precision engineering,
chemical engineering and metallurgy.  The raw material i.e. high-carbon steel wire is swaged and die-
pressed to obtain eye configuration.  It is then grooved and fin (formed during die press stage)
removed.  At this stage the needle is pointed.  The next stage is to heat treat and chemically  debur itto give strength and make the eye smooth.  Thereafter, the needle is given the desired point (ball,
cutting point etc.).  The final operation is to chrome plate it and polish the needle.  The needle is 100
per cent visually inspected for quality before despatch.  The ISMN are used in sewing machines for
sewing a range of products including but not limited to garments, shoes, leather garments,
embroidery, tarpaulin, toys, seat covers for automobiles, etc.
4. Increased imports
ISMN is imported into India mainly from the People's Republic of China, Germany, Japan,
Korea, Rep., Singapore and Chinese Taipei.  The imports of ISMN in general from all countries puttogether increased from 116,470 kg. in 1997-98 to 181,981 kg. in 2001-02 (Annualized).  The imports
of ISMN from the People's Republic of China have shown an increase in absolute terms as well as
compared to domestic production.  The imports and domestic production of ISMN during 1997-98 to
2001-02 have been as under:G/SG/N/6/IND/14
Page 3
(Figures:  Qty. in kg./value in Rs. lakhs)
Imports
China, P.R. Others Total
YearDomestic
production Qty. Value Qty. Value Qty. ValueImports from
China, P.R.
as % of
domestic
production
1997-98 1,544 53,545 238.64 62,925 543.95 116,470 782.59 3,468%
1998-99 3,683 85,818 436.09 58,912 746.65 144,730 1,182.74 2,330%
1999-00 4,755 79,403 533.15 88,830 911.38 168,233 1,444.53 1,670%
2000-01 4,353 29,270 190.06 65,602 884.95 94,872 1,075.01 672%
2001-02 5,351 104,216 696.79 77,765 1,346.81 181,981 2,043.60 1,948%
5. Market disruption
The increased imports of ISMN have caused/th reatened to cause market disruption to the
domestic producers of ISMN as indicated by the following factors:
(a) Prices of ISMN originating from China, P.R. have been steadily falling.  The c.i.f.
price of ISMN which was Rs 446 per kg. in 1997-98 increased to Rs 671 per kg. in
1999-2000 and declined to Rs 649 per kg. in 2000-01 and thereafter improved
marginally to Rs 669 per kg. whereas the prices of ISMN originating from other
countries have shown an upward trend from Rs 1,210 per kg. in 1997-98 to Rs 2,425
per kg. in 2001-02.  To keep up with the decline in prices of ISMN originating fromChina and to retain their market share, the domestic producer had to reduce their
prices of ISMN, as a consequence, their realization has declined considerably and
resulted in loss to the domestic producer.  The realization which was Rs 7,140 per kg.
in 1998-99 declined to Rs 5,096 per kg. in 1999-2000 and improved marginally to
Rs 5,128 per kg. in 2000-01, thereafter, fell appreciably to Rs 3,817 per kg. in2001-02.
(b) The capacity utilization of the domestic producer which was 57 per cent in 1998-99
declined to 51 per cent in 1999-2000, increased to 58 per cent in 2000-01 and
registered a decline of 13 per cent in 2001-02 which is at 45 per cent.
(c) While the market share of domestic producer of ISMN, considering the imports
emanating from all countries, improved from 1.14 per cent in 1997-98 to about 3 per
cent in 2000-01 in the total domestic consumption of ISMN, fell to 2.48 per cent in
2001-02, but the injury suffered by the domestic producer by way of loss of marketshare was around 5 per cent considering the imports emanating from the People's
Republic of China during the said period as is indicated in the table below.  The
domestic producers have been able to retain even this reduced market share only at
the cost of reduction of their sales price.
Year Domestic sales Total domestic
consumption (imports
from the People's
Republic of China and
domestic sales)Share of domestic
sales to domestic
consumption
(2/3 x 100%)Total domestic
consumption
(imports from all
countries and
domestic sales)Share of domestic
sales to domestic
consumption
(5/6 x 100%)
(1) (2) (3) (4) (5) (6)
1997-98 1,348 54,893 2.45% 117,818 1.14%
1998-99 1,621 87,439 1.85% 146,351 1.11%
1999-00 3,549 82,952 4.28% 171,782 2.07%
2000-01 2,836 32,106 8.83% 97,708 2.90%
2001-02 4,631 108,847 4.25% 186,612 2.48%G/SG/N/6/IND/14
Page 4
6. The domestic producers have requested the imposition of safeguard duty on imports of ISMN
originating from China.  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 ISMN
from the People's Republic of China have caused/threatened to cause market disruption to the
domestic producers of ISMN and accordingly it has b een decided to initiate an investigation through
this notice.
8. All interested parties may make their views known by 23 September 2002  to:
The Director General (Specific Safeguards)
5th Floor, Drum Shape Building
I.P. Bhawan, I.P. Estate
New Delhi-110002
India
9. All known interested parties are also being addressed separately.
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.
(R.K. GUPTA)
Director General ( Specific Safeguards)
__________