WORLD TRADE
ORGANIZATIONG/SG/N/6/IND/5
12 May 1998
(98-1881)
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, 24 April 1998
No. SG/INV/1/1998
Subject: Initiation of Safeguard Investigation concerning Imports of Hard Board (High Density
Fibre Board) 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 All India Fibreboard Manufacturers Association for
imposition of Safeguard Duty on imports of Hard Board into India to protect the domestic producersof Hard Board against serious injury caused by the increased imports of Hard Board into India.
2. Domestic industry:  The application has been filed by All India Fibreboard Manufacturers
Association on behalf of the domestic producers of Hard Board.  There are three domestic producers
of Hard Board accounting for the entire domestic production of Hard Board namely M/s Western
India Plywoods Ltd., Kanpur, M/s Jolly Boards , Ltd., Mumbai, and M/s National Boards Ltd.,
Bangalore, and all the three are members of the Association.
3. Product involved:  The applicants have alleged serious injury caused to the domestic
producers by the increased imports of Hard Board into India.  Hard Board classified under sub-
heading no. 4411.11 and 4411.19 of the First Schedule to the Customs Tariff Act, 1975, and under
44111100 and 44111900 of the Indian Trade Classification (ITC) is a sheet material manufactured
from fibres of lignocellulosic material from the primary bond deriving from the felting of the fibres
and their inherent adhesive properties.  It is produced by wet process and dry process.  In wet process,fibre separated from chips of Nilgiri and Ainwood is diluted with water and pumped to the wet
forming machine at further diluted consistency.  Chemicals like paraffin wax and binding resins are
added to give the board predetermined properties, to ensure uniform quality and to improve the water
resistance of the board.  The pulp is dosed to the inlet of the forming machine where an endless fibreG/SG/N/6/IND/5
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mat is formed which is cut into sheets for further processing.  In the dry process the chips are exposed
to high steam pressure for a short time in a steel cylinder and thereafter a valve is quickly opened and
the contents blown out.  Due to the rapid decrease of pressure, the chips are exploded into fibre-
bundles and fibre.  Dry fibres are handled pneumatically and fed through blowers on the forming
machine.  Appropriate resin is then mixed and the board is formed and the sheets are pressed under
heat and pressure.  Hard Board is available in A, B and C grades which are used for interiordecoration, frame-making, furniture-making, for door trims in automobiles, for packaging and by
drum manufacturers only.  The domestic producers manufacture only 'A' grade Hard Board.  The
imported 'B' and 'C' grades and offcuts/sizes are substituting domestic 'A' grade as these are used in
place of domestic 'A' grade Hard Board.  Hard Board is also being classified under 44112900 and
44119900.
4. Increased imports:  Until 1994-95 there were no imports of Hard Board entering into India.
From 1995 onwards Hard Board is being imported into India from Thailand, South Africa, Malaysia,
Italy and Pakistan and the imports have shown an increasing trend in absolute terms as well as
compared to domestic production.  The imports and domestic production of Hard Board during
1995-96 to 1997-98 have been as under.
Year Domestic production
(MT)Imports (MT) Imports as a percentage of
domestic production
1995-96 43,738 141.57 0.32
1996-97 45,808 839.14 1.83
1997-98 40,858 11,227 27.47
5. Injury:  The increased imports of Hard Board have caused and have further threatened to
cause serious injury to the domestic producers of Hard Board as indicated by the following factors:
(a) Domestic production which had gone up from 43,738 MT in the year 1995-96 to
45,808 MT in the year 1996-97 has come down to 40,858 MT in the year 1997-98,
i.e. a fall in production of 10.80 per cent.
(b) Capacity utilization which had gone up from 76.4 per cent in the year 1995-96 to
80 per cent in the year 1996-97 has gone down to 71.37 per cent in the year 1997-98as indicated in the table below:
Year Installed
capacity (MT)Production
(MT)Capacity
utilization (%)Sales (MT) Closing stock
(MT)
1995-96 57,250 43,738 76.04 44,644 1,637
1996-97 57,250 45,808 80.01 45,175 2,270
1997-98 57,250 40,858 71.37 38,229 4,899
(c) Sales which had also gone up from 44,644 MT in the year 1995-96 to 45,175 MT in
the year 1996-97 have come down to 38,229 MT in the year 1997-98, i.e. a loss ofG/SG/N/6/IND/5
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15.37 per cent resulting in a significant increase in closing stock to the tune of
4,899 MT in 1997-98 as compared to 2,270 MT in the year 1996-97.
(d) The domestic producers have been able to maintain their reduced market share by
selling their product at a price below their cost of production in the year 1997-98.
(e) To avail the benefit of economy of scale, the domestic producers have undertaken
expansion plans to increase their capacity by 45,000 MT at a total outlay of 85 croreswhich are nearing completion in the next six months.  Increased imports of Hard
Board at cheaper rates have put their plans in serious jeopardy.
(f) Loss of employment - about 15/20 per cent of the labour/staff is redundant,
particularly in National Board and Jolly Board Ltd.  National Board were closed for
two months and Jolly Board Ltd. have shut down their night shift production during
the last two months.  The two units have lost 28,364 man days of their
permanent/contract workers.
6. The domestic producers have requested for imposition of safeguard duty on imports of Hard
Board for a period of four 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 Hard
Board have caused and have further threatened to cause serious injury to the domestic producers ofHard Board and accordingly it has been decided to initiate an investigation through this notice.
8. All interested parties may make their views known by 7 June 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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