WORLD TRADE
ORGANIZATIONG/SG/N/6/IND/4
12 May 1998
(98-1879)
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 6 May 1998, has been received from the Permanent
Mission of India.
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NOTICE OF INITIATION OF A SAFEGUARD INVESTIGATION
(Under Rule 6 of the Customs Tariff (Identification and Assessment of Safeguard Duty)
Rules, 1997)
New Delhi, 26 February 1998
No. SG/INV/5/1997
Subject: Initiation of Safeguard Investigation concerning Imports of Propylene Glycol 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 M/s Manali Petrochemicals Ltd., Chennai and
M/s SPIC Organics Ltd., Chennai, for the imposi tion of safeguard duty on imports of Propylene
Glycol into India to protect the domestic producers of Propylene Glycol against serious injury caused
by the increased imports of Propylene Glycol into India.
2. Domestic industry:  The application has been filed by M/s Manali Petrochemicals Ltd.,
Chennai and M/s SPIC Organics Ltd., Chennai, who are the only domestic producers of Propylene
Glycol accounting for the total domestic production of Propylene Glycol.
3. Product involved:  The applicants have alleged serious injury caused to the domestic
producers by the increased imports of Propylene Glycol into India.  Propylene Glycol classified under
sub-heading no. 2905.32 of the First Schedule to the Customs Tariff Act, 1975, and under 29053200
of the Indian Trade Classification (ITC) is a chemical manufactured from propylene oxide by
hydrating the product at a higher pressure and temperature which forms a mixture or Mono, Di and
Tripropylene Glycol.  Monopropyle ne Glycol, generally known as Propylene Glycol is separated from
this mixture by fractionation and distillation.  Propy lene Glycol is available in pharmacopial grade
and industrial grade which are used in the manufacture of drugs, in food and flavour industry and
industrial applications respectively.  The two grades are similar in their composition and
characteristics.  Worldover pharmacutical grade product conferring to USP/BP/IP is used for
application in food/flavour industry.  In India, however, pharmacopial grade product can be sold only
to a valid drug licence holder.  A new grade called Food and Flavour grade has been created by theG/SG/N/6/IND/4
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domestic producers in India which is exactly the same as IP grade but sold to people without drug
licence.
4. Increased imports:  Propylene Glycol is imported into India from Germany, Japan,
Korea, Rep. of, Mexico, Singapore, United States  and Hong Kong, China.  The imports have shown
an increasing trend in absolute terms as well as compared to domestic production.  The imports anddomestic production of Propylene Glycol during 1994-95 to 1997-98 (April-August) have been as
under:
Year Domestic production
(MT)Imports (MT) Imports as percentage of
domestic production
1994-95 9,939 395 3.97
1995-96 10,006 783 7.82
1996-97 9,943 1,419 14.27
1997-98
(April-Aug.)5,553 854 15.38
5. Injury:  The increased imports of Propylene Glycol have threatened to cause serious injury to
the domestic producers of Propylene Glycol as indicated by the following factors.
The domestic production is stagnating at around 9,900 MT in the last three years with the
capacity utilization also stagnating at around 75 per cent.  In the year 1997-98 (April-August)
although the capacity utilization has improved to 101 per cent with a production of 5,553 MT, the
closing stock has increased significantly to 1,137 MT from 207 MT in 1996-97.  The domestic
producers have been able to achieve a sale of 4,624 MT in the year 1997-98 (April-August) ascompared to 11,306 MT in 1994-95, 10,259 MT in 1995-96 and 10,183 MT in 1996-97, but at the
cost of a drastic reduction in the average selling price which has been reduced from Re 74,896 per MT
to Re 63,060 per MT, a fall of about 15.8 per cent (of the 1996-97 average selling price).  The
domestic producers have started incurring cash losses.
The table below shows capacity, capacity uti lization, production, sales, closing stock and
average selling price of Propylene Glycol for 1994-95 to 1997-98 (April to August).
Year Installed
capacity
(MT)Capacity
utilization
(%)Production
(MT)Sales (MT) Closing
stock (MT)Average
selling price
(Re/MT)
1994-95 13,250 75 9,939 11,306 701 61,501
1995-96 13,250 76 10,006 10,259 447 80,658
1996-97 13,250 75 9,943 10,183 207 74,896
1997-98(April-Aug.)5,521 101 5,553 4,624 1,137 63,060G/SG/N/6/IND/4
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Large capacity plants have also been set up closer to India who have availability of raw
materials to them at prices much lower than in India.
6. The domestic producers have requested for imposition of safeguard duty on imports of
Propylene Glycol for a period of two years.  They have also requested for an immediate imposition of
provisional safeguard duty.
7. The application has been examined and it is found that prima facie  increased imports of
Propylene Glycol have threatened to cause serious injury to the domestic producers of Propylene
Glycol and accordingly it has been decided to initiate an investigation through this notice.
8. All interested parties may make their views known by 13 April 1998 to:
The Director-General (Safeguards)
5th Floor, D-Block,
Indraprastha Bhawan, I.P. EstateNew 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 request so as to reach the Director-General (Safeguards) within 21 days from the date ofthis notice.
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