India may impose safeguard duty on Phthalic Anhydride imports from South Korea

New Delhi: India may impose safeguard duty on imports of Phthalic Anhydride from South Korea after I G Petrochemicals Limited and Thirumalai Chemicals Limited alleged injury and requested for suspension of concessions on imports from Korea under the India-Korea Comprehensive Economic Partnership Agreement (CEPA) to restore fair competition. The Directorate General of Trade Remedies (DGTR) on Tuesday recommended a 100% rise in customs duty to the level of Most Favoured Nation in the first year and 75% in the second year.

Pursuant to India-Korea CEPA, the duty on imports of Phthalic Anhydride from Korea has been reduced to zero over the years.

Phthalic Anhydride is a chemical intermediate in plastic industry.

“It is considered appropriate to recommend bilateral safeguard measure in terms of Rule 10 of India-Korea CEPA (Bilateral Safeguard Measures) Rules, 2017,” DGTR said.

It said imports of the product from Korea have increased and caused “serious injury and threatened to caused serious injury to the domestic industry”. “

“There exists a causal link between the increased imports of the originating good due to the reduction or elimination of a custom duty under the Korea-India CEPA and serious injury and threat of serious injury to the domestic industry,” the authority said.

The measure is recommended for a period of two years from the date of issue of the notification of imposition of provisional duty by the central government on July 6, 2020 when India had eliminated the concessions given under the CEPA and increased the rate of custom duty to 7.5% on imports from Korea for a period of 200 days.

As per the notification, the present recommendation is not for imposition of additional duty. It is for withdrawal of a concession given earlier.

“The measure is only against the Korean imports. Even these imports will continue, albeit at MFN rate of customs duty,” it said, adding that all other sources of imports are open. It is also seen that the domestic industry is expanding its capacity and there will be additional material available in the domestic market.

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