The government is likely to impose 25 per cent safeguard duty on PAN, a product used in manufacturing plastics and dyes, to discourage imports and protect domestic producers.
The Director General of Safeguards (DGS), an agency which investigates problems pertaining to cheap imports, had already recommended to the government to impose safeguard duty on Pthallic Anhydride (PNA) which is being imported mainly from countries like South Korea, Taiwan and Indonesia.
After investigating the complaints form domestic producers, the DGS suggested that the government should impose 25 per cent safeguard duty on PAN for about seven months.
"The findings shows that increased imports of PAN have caused and threatened to cause serious injury to domestic producers...Any delay in application for safeguard measure would cause damage which would be difficult to repair," an official said.
The four major producers of the chemical in the country - Thirumalai Chemicals, SI Group India, IG Petrochemicals and Mysore petrochemicals - constitutes 85 per cent of the domestic production of PAN.
The four major players have said they have shut down their plants, he said.
Imports into India have increased by 60 per cent from 2004 -05 to 2006-07 onwards. "Customs duty on the import of the chemical has come down to 7.5 per cent from 30 per cent in 2008-09 exposing domestic industry to international competition," he added.
In 2004-05, imports of the chemical was 19,599 tonnes, which rose to 18,665 tonnes only in the first five months of the current fiscal.
Unlike anti-dumping duty, which varies from product to product and country to country, safeguard duties are levied in a uniform way.