The government has imposed a 20-per cent safeguard duty on pthallic anhydride (PAN), a chemical used in the manufacture of plastics and dyes, for 200 day, in order to discourage imports and protect local producers.

"The government has imposed 20 per cent safeguard duty on import of PAN," a senior commerce ministry official said, adding the duty would remain in place for 200 days.

The duty was imposed following recommendations from the directorate general of safeguards (DGS), which had recommended imposition of 25 per cent safeguard duty on import of pthallic anhydride for about seven months.

The investigation followed an application filed by four affected firms - Thirumalai Chemicals Ltd (Ranipet, Tamilnadu), IG Petrochemicals Ltd (Raigad, Maharashtra), Mysore Petrochemicals Ltd (Raichur, Karnataka) and SI Group India Ltd (Navi Mumbai, Maharashtra) - for imposition of safeguard duty to protect the domestic producers against serious injury caused by the increased imports of phthalic anhydride into India.

The four companies account for about 85 per cent of pthallic anhydride production in the country.

The applicants have alleged serious injury caused to the domestic producers by the increased imports of phthalic anhydride into India. Phthalic anhydride is the principal commercial form of phthalic acid. It is produced by catalytic oxidation of ortho-xylene (OX) with air or by the catalytic oxidation of naphthalene and is used in organic synthesis of plastics (alkyd resins) and plasticizers, etc.

Phthalic anhydride is imported into India from Republic of Korea, Indonesia, Israel, Taiwan and Pakistan. The imports pthalic anhydride have shown an increasing trend in absolute terms as well as compared to the domestic production.

Imports of the chemical rose by 60 per cent from 19,599 tonnes for the whole of the financial year 2004-05 to 18,600 tonnes in the first five months of fiscal 2006-07.

Unlike anti-dumping duty, which varies from product to product and country to country, safeguard duties are levied in a uniform way.