OFFICE OF THE DIRECTOR GENERAL (SPECIFIC SAFEGUARDS)

NOTIFICATION

New Delhi, the 13th 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 Peoples Republic of China.

G.S.R. 611(E).—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 Peoples Republic of China

to protect the domestic producers of ISMN against market disruption caused by

the increased imports of ISMN into India.

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 reportedly producing ISMN, Altek accounts for

the major production and sale of ISMN.

Product Involved

The applicants have alleged market disruption caused to the domestic

producers by the increased imports of ISMN originating from PR China 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 the Indian Trade Classification

(ITC). The process of manufacturing ISMN involves more than 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

needle is pointed. Next stage is to heat treat and chemically debur it to give

strength and make the eye smooth. Thereafter, the needle is given the desired

point (Ball, cutting point etc.,). Final operation is to chrome plate it and polish the

needle. The needle is 100% visually inspected for quality before despatch. The

ISMN are used in Sewing Machine for sewing a range of products including but

not limited to Garments, Shoes, Leather Garments, Embroidery, Tarpaulin, Toys,

Seat covers for automobiles etc.,

Increased Imports

ISMN is imported into India mainly from the Peoples Republic of China,

Germany, Japan, Korea (RP), Singapore and Taiwan (Chinese Taipei).

The

imports of ISMN in general from all countries put together increased from 116470

kgs. in 1997-98 to 181981 kgs in 2001-02 (annualised) . The imports of ISMN

from the Peoples 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:

(Fiaures : Qtv. in Kas.A/alue in Rs. lakhs")

Year

1997-98

1998-99

1999-00

2000-01

2001-02

Domestic

Production

1544

3683

4755

4353

5351

Imports

China

Qty.

53545

85818

79403

29270

104216

Value

238.64

436.09

533.15

190.06

696.79

Others

Qty.

62925

58912

88830

65602

77765

Value

543.95

746.65

911.38

884.95

1346.81

Total

Qty.

^116470

144730

168233

94872

181981

Value

782.59

1182.74

1444.53

1075.01

2043.60

Imports

from China

Domestic

Production

3468%

2330%

1670%

672%

1948%

5. Market Disruption

The increased imports of ISMN have caused /threatened to cause market

disruption to the domestic producers of ISMN as indicated by the following

factors:

(a)

Prices of ISMN originating from China have been steadily falling. The CIF

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 cri..«js of ISMN originating

from other countries have shown an upward trend from Rs 1,210 per kg in 97-98

to Rs 2,425 per kg in 2001-02. To keep up with the decline in prices of ISMN

originating from China and to retain their market share, the domestic producer

_ 7

had to reduce their prices of ISMN, as a sequel, their realisation has declined

considerably and resulted in loss to the domestic producer. The realisation which

was Rs.71407- per kg. in the 1998-99 declined to Rs.5096/- per kg. in 1999-2000

and improved marginally to Rs.5128/- per kg. in 2000-01, thereafter, fell

appreciably to Rs.3817/- per kg in 2001-02.

(b) The capacity utilisation of domestic producer which was 57% in 1998-99

declined to 51% in 1999-2000, increased to 58% in 2000-01 and registered a

decline of 13% in 2001-02 which is at 45% .

(c)

While the market share of domestic producer of ISMN, considering the

imports emanating from all countries, improved from 1.14% in 1997-98 to about

3% in 2000-01 in the total domestic consumption of ISMN, fell to 2.48% in 2001-

02, but the injury suffered by the domestic producer by way of loss of market

share was around 5% considering the imports emanating from the Peoples

Republic of China during the said period as would be 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

1997-98

1998-99

99-2000

2000-01

2001-02

Domestic

sales

(2)

1348

1621

3549

2836

4631

Total

Domestic

consumption

(imports

from

the

Peoples

Republic of China and

domestic sales)

(3)

54893

87439

82952

32106

108847

domestic Sales

domestic

consumption

(2/3x100%)

(4)

2.45%

1.85%

4.28%

8.83%

4.25%

Total

Domestic

consumption

(imports from all

countries

and

domestic sales)

(5)

117818

146351

171782

97708

186612

domestic

Sales

domestic

consumption

(5/6x100%)

(6)

1.14%

1.11%

2.07%

2.90%

2.48%

The domestic producers have requested for imposition of safeguard duty

on imports of ISMN originating from China. They have also requested for an

immediate imposition of provisional safeguard duty.

The application has been examined and it appears that prima facie

increased imports of ISMN from the Peoples Republic of China have

caused/threatened to cause market disruption to the domestic producers of ISMN

and accordingly it has been decided to initiate an investigation through this

notice.