Non-Phthalate Plasticizers Key in PVC Compound under Safeguard Duty to Get Over Korea FTA Market Dominated by KL Jain Group

Ø No More Concessional Duty for One Year, Only 25% Concession in Next Year

Ø Complainant: KLJ Plasticizers Ltd.

Ø Non-phthalate plasticizers like Dioctyl Terephthalate (DOTP) and Diethylhexyl Cyclohexane (DEHCH) are used to increase the flexibility and durability of polyvinyl chloride (PVC) products, offering safer, eco-friendly alternatives to traditional phthalate plasticizers. Key applications include toys, medical devices, food-contact materials, upholstery, and outdoor products, with DEHCH providing benefits such as faster processing and superior UV and cold resistance. DOTP is favored for its broad compatibility and good heat resistance, making it suitable for various molding techniques.

[DGTR Final Findings Case No. (SG)-01/2025 dated 27 May, 2026]

The document provides a detailed investigation and final findings on the bilateral safeguard measures concerning imports of Non-Phthalate Plasticizers, specifically DOTP and DEHCH, from Korea under India-Korea CEPA, including procedural steps, product scope, domestic industry standing, injury analysis, causality, and recommendations for tariff adjustments.

Background and Initiation of Investigation

· The application was filed by KLJ Plasticizers Limited supported by other domestic producers, claiming increased Korean imports caused injury.

· The investigation was initiated based on a substantiated application, with notices sent to Korean exporters, domestic users, and other stakeholders.

· The period of investigation covers April 2021 to March 2025, focusing on recent import trends and injury parameters.

· The scope of product under consideration includes Non-Phthalate Plasticizers, specifically DOTP and DEHCH, identified by chemical formulas and CAS numbers.

· The investigation examined whether increased imports from Korea caused injury to domestic producers, considering product similarity and substitutability.

Product Scope and Like/Directly Competitive Articles

· The scope includes Non-Phthalate Plasticizers in the form of DOTP and DEHCH, which are chemically distinct but used interchangeably in many applications.

· Domestic industry produces both products, with evidence showing they are used by the same consumers and in similar applications.

· DEHCH, produced by hydrogenating DOTP, is considered directly competitive due to similar applications and substitutability.

· The scope also considers whether products with different CAS numbers or HS codes are part of the same product under investigation.

· The investigation confirms that DEHCH and DOTP are like or directly competitive, despite physical and chemical differences.

Domestic Industry Standing and Production Capacity

· The application is supported by KLJ Plasticizers Limited, which accounts for approximately 60-70% of Indian production.

· Other known producers include Payal Polyplast, Payal Plastichem, and Rachna Plasticizers, but some have not participated or produced during the investigation.

· Domestic industry has sufficient capacity, with production levels increasing but utilization remaining below full capacity.

· The domestic industry has demonstrated that it constitutes a major proportion of Indian production, fulfilling standing requirements.

· The industry’s production, sales, and capacity utilization trends indicate a resilient but challenged sector due to import competition.

Confidentiality and Data Transparency

· The domestic industry and other stakeholders raised concerns about excessive confidentiality claims over sensitive data.

· The investigation accepted confidentiality claims where justified, ensuring that critical business information was protected.

· Summaries and non-confidential versions of data were provided to facilitate stakeholder participation.

· Confidentiality issues included performance parameters, plant shutdowns, demand figures, and internal operational data.

Source of Import Data and Tariff History

· Import data from DGCI&S was relied upon, covering transaction-wise details during the injury period.

· India-Korea CEPA, signed in 2009, progressively eliminated tariffs, with duties reduced to zero by 2017.

· The tariff history shows a steady decline from around 10.94% in 2010 to zero since 2017, facilitating increased Korean imports.

· The investigation assesses whether tariff elimination significantly contributed to the surge in imports.

Scope of Product and Substitutability

· Interested parties argued that DEHCH and DOTP are distinct products with different properties and applications.

· The domestic industry and authorities concluded that despite differences, the products are interchangeable in many applications.

· Evidence shows that DEHCH is used as a substitute for DOTP by the same consumers, with similar physical properties.

· The investigation considers whether DEHCH should be excluded from scope, ultimately including it due to its direct substitutability.

· The scope also encompasses products with different HS codes and CAS numbers, as classification is only indicative.

Increase in Imports and Trends

· Imports from Korea increased sharply, by over 550% in absolute terms, from 2021-22 to 2024-25.

· The share of Korean imports in total imports rose significantly, while domestic market share declined.

· Import volumes grew despite domestic industry capacity, indicating a surge linked to tariff reductions.

· Prices of Korean imports have been below domestic prices, with evidence of price undercutting and suppression.

· The trend shows a consistent increase in import volumes, especially after tariff elimination, impacting domestic sales.

Injury Analysis and Causality

· The domestic industry experienced deterioration in profitability, cash profits, and return on capital employed.

· Domestic sales increased marginally, but market share declined due to rising imports.

· Inventories accumulated, and capacity utilization remained below full potential, indicating adverse effects.

· The investigation found a causal link between increased Korean imports and injury, including price undercutting and market share loss.

· Other factors such as demand fluctuations, capacity, and internal inefficiencies were examined but found less significant.

· The evidence supports that increased imports from Korea caused serious injury to domestic producers.

Price Trends and Competitive Impact

· Import prices from Korea have been lower than domestic prices, leading to price undercutting.

· Domestic prices declined more than raw material costs, indicating price suppression.

· Despite some claims, the import prices have remained at a level that exerted pressure on domestic prices.

· The domestic industry’s inability to maintain profitability is linked to the surge in low-priced imports.

· The products are used interchangeably, and import prices directly impact domestic market conditions.

Capacity, Production, and Utilization

· Domestic capacity has remained stable, with production increasing but utilization below full capacity.

· The domestic industry has the potential to meet demand but faces pressure from imports.

· Production and sales trends show that domestic industry has been forced to reduce prices to compete.

· The industry’s operational parameters indicate a sector under stress due to import competition.

Injury and Causal Link

· The domestic industry has suffered serious injury, including declining profits, market share, and profitability.

· The surge in Korean imports, facilitated by tariff elimination, is identified as the primary cause.

· Other potential causes, such as demand contraction or internal inefficiencies, were examined and found less impactful.

· The evidence confirms a direct causal link between increased Korean imports and injury to domestic producers.

Recommendations and Public Interest

· The investigation recommends withdrawal of tariff concessions and imposition of customs duties on Korean imports for two years.

· The proposed measures aim to restore fair competition and protect domestic industry viability.

· Stakeholder concerns about downstream impact and public interest were considered but found less significant.

· The measures are temporary, designed to allow domestic producers to adjust and compete effectively.

· The final decision balances trade obligations with the need to prevent injury to domestic industry.

Overall Conclusion

· The investigation concludes that increased imports from Korea, due to tariff elimination, caused serious injury to Indian producers of DOTP and DEHCH.

· The domestic industry’s performance has deteriorated because of price undercutting, market share loss, and profitability decline.

· The authorities recommend imposing safeguard duties to address the injury and ensure fair trade practices.