Government investigating acetone imports

The Union government has ordered ‘safeguard’ investigations into the import of acetone in the country. This is in response to an application filed by the two leading producers of acetone, Hindustan Organic Chemicals Ltd and Herdillia Chemicals Ltd, alleging serious injury on account of imports.

The director-general (safeguards) in the commerce ministry, on examining the application, has contended that prima facie increased imports of acetone have threatened to cause serious injury to the domestic industry. Acetone is a basic organic chemical used in numerous organic synthesis, either as an intermediate or as a solvent.

The total production of acetone in the country is 42,618 tonnes, as of 1998-99. Of this, Hindustan Organics and Herdillia Chemicals account for 41,222 tonnes, while the rest is divided among six other manufacturers.

Acetone imports into India have increased steadily over the past five years. In 1994-95, imports as a percentage of domestic production were 21.17 per cent. They rose to 37.37 per cent in 1995-96 and peaked to 66.77 per cent in 1996-97. In the following year, imports dropped to 38.11 per cent before rising to 67.74 per cent in 1998-99. The imports mainly originate from Canada, China, Taipei, France, Finland, German, Japan, Korea DPR, Korea RP, Russia, Saudi Arabia, Singapore, South Africa, the United Kingdom and the US.

The applicants say that domestic manufacturers have been forced to cut prices to the tune of 36 per cent in order to retain their market share in a highly competitive marketplace. In 1996-97 and 1997-98, the market share of Indian producers of acetone was 68 per cent of total domestic consumption. However, in 1998-99, the market share declined to 59.21 per cent.

According to the applicants, domestic manufacturers have been able to retain this reduced market share after a cut in the sales price from Rs 28 per kg in March 1998 to Rs 18 per kg in March 1999, seriously affecting profitability.